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Mr. Meadows Cookie Company: Total cost of the constant workforce plan

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Production and Operation Analysis - 4th edition - Steven Nahmias - Question 36 - Chapter 3

The Mr. Meadows Cookie Company can obtain accurate forecasts for 12 months based on firm orders. These forecasts and the number of workdays per month are:

Month Demand Forecast Workdays
(in K's of cookies)
1 850 26
2 1260 24
3 510 20
4 980 18
5 770 22
6 850 23
7 1050 14
8 1550 21
9 1350 23
10 1000 24
11 970 21
12 680 13

During a 46-day period when there were 120 workers, the firm produced 1,700,000 cookies. Assume that there are 100 workers employed at the beginning of month 1 and zero starting in inventory.

a) find the minimum constant workforce needed to meet monthly demand
b) assume Ci=$0.10 per cookie per month, Ch=$100 and Cf=$200. Add columns that give the cumulative on-hand inventory and inventory cost. What is the total cost of the constant workforce plan?
c) Construct a plan that changes the level of the workforce to meet monthly demand as closely as possible. In designing the logic for your calculations, be sure that inventory does not go negative in any month. Determone the cost of this plan.

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