An automobile manufacturer needs to plan
its production for the next year. Demands for the next 12 months are forecasted
to be 940, 790, 360, 720, 270, 130, 160, 300, 990, 290, 280, and 790. Other
relevant information is as follows:
â– Workers are paid $5000 per month.
â– It costs $500 to hold a car in inventory for a month. The holding
cost is based on each month’s ending inventory.
â– It costs $4000 to hire a worker.
â– It costs $6000 to fire a worker.
â– Each worker can make up to eight cars a month.
â– Workers are hired and fired at the beginning of each month.
â– At the beginning of month 1 there are 500 cars in inventory and 60
workers.
How can the company minimize the cost of
meeting demand for cars on time?