Develop a production schedule to produce the exact production requirements by varying the workforce size for the following problem. The monthly forecasts for Product X for January, February, and March are 1,010, 1,490, and 1,240, respectively. Safety stock policy recommends that half of the forecast for that month be defined as safety stock. There are 22 working days in January, 19 in February, and 21 in March. Beginning inventory is 550 units. Manufacturing cost is $200 per unit, storage cost is $5 per unit per month, standard pay rate is $8 per hour, overtime rate is $12 per hour, cost of stock-out is $10 per unit per month, marginal cost of subcontracting is $9 per unit, hiring and training cost is $260 per worker, layoff cost is $360 per worker, and worker productivity is 0.1 unit per hour. Assume that you start off with 42 workers and that they work 8 hours per day. (Leave the cells blank, whenever zero (0) is required. Input all values as positive values. Round your answers to the nearest whole number.)

Answer & Explanation:

Productivity = Units /hour0.1  

1 unit = 10 hours                 10  

Working hours /day          8  

                                                           Jan       Feb             March

Working days                                            22       19             21

Forecast                                                    1010       1490             1240

Safety Stock = Half of the Forecast    505       745             620

Beg inventory = Ending inventory

for last month 550 for January            550        508             751

Net Production required = Forecast

+ Safety Stock - Beginning inventory     965        1727             1109

Workers required=(net production*10)/(working days *8), round the number up.                                                            55        114             67

Hired                                                    55-42 = 1359             0

Laid off                                                    0                 0             47

Actual production = (Number of workers*Working days * 8) / 10

                                                                  968         1733     1126

Ending inventory= Actual production + Beginning inventory - Demand forecast)                                                    508         751             636

Costs                                                Jan            Feb         Mar

Labor = Total Workers * Working days * 8 hours * $8

                                                              $77,440    $138,624$90,048

Inventory= (Beginning inventory + Ending inventory) / 2 * $5

                                                              $2,645.00  $3,147.00     $3,468.00

Hiring = People hired * Hiring cost      $3,380    $15,340  0

Layoff = People fired * Firing cost0             0                  $16,920

Total                                                 $83,465    $157,111  $110,436

Total cost                                                                    $351,012

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