# Adv. Production and Inventory Control

The personnel department of a company wants to know how many workers will be needed each

month for the next six-month production period. The following table shows the monthly

demand forecast for the six-month period.

Month Demand

July 1,250

August 1,100

September 950

October 900

November 1,000

December 1,150

The inventory on hand at the end of June was 500 units. The company wants to maintain a

minimum inventory of 300 units each month and would like to have 400 units on hand at the

end of December. Each unit requires 5 employee-hours to produce, there are 20 working days

each month, and each employee works an 8-hours day. The workforce at the end of June was 35

workers. Assume Hiring cost =$500 and Firing cost = $1,000

a) Determine a minimum inventory production plan (chase strategy)

b) Determine the total cost for part a

c) Determine the level production plan that meets demand but does not hire or fire workers

during the six-month period.

d) Determine the total cost for part c

e) Construct the LP model for the problem and determine the optimal solution using LINDO or

Excel

2. Consider the following data

year 1 Demand (Thousands of packages)

1 300

2 120

3 200

4 135

Assume that the company has three workers on the payroll. The owner of the company estimates

that he will have 20,000 packages on hand at the end of the current year. Assume that, on average,

each worker is paid $ 25,000 per year and is responsible for producing 30,000 packages, inventory

cost have been estimated to be 4 cents per package per year and shortages are not allowed.

Based on the effort of interviewing and training new workers. The owner estimates that it cost

$500 for each worker hired. The firing cost is $1,000

a) Determine a minimum inventory production plan (chase strategy)

b) Determine the total cost for part a

c) Determine the level production plan that meets demand but does not hire or fire workers

during the 4-year period.

d) Determine the total cost for part c

e) Construct the LP model for the problem and determine the optimal solution using LINDO or

excel