Chase demand Quarter 1 2 3 4

Starting inventory 0 0 0 0
Demand forcast 70000 100000 50000 150000
Production requirement 70000 100000 50000 150000
Workers needed 50 56 80 40 120
Workers hired 6 24 0 80
Workers laid of 0 0 40 0
Labor cost 1400000 2000000 1000000 3000000
Holding cost 0 0 0 0
Hiring cost 1200 4800 0 16000
Firing cost 0 0 20000 0

Total labor cost 7400000

Total inventory cost 0
Total hiring cost 22000
Total firing cost 20000
Total cost 7442000

Chase demand Quarter 1 2 3 4

Starting inventory 0 0 0 50000
Demand forcast 70000 100000 50000 150000
Production requirement 70000 100000 100000 100000
Workers needed 50 56 80 80 80
Workers hired 6 24 0 0
Workers laid of 0 0 0 0
Labor cost 1400000 2000000 2000000 2000000
Holding cost 0 0 0 50000
Hiring cost 1200 4800 0 0
Firing cost 0 0 0 0

Total labor cost 7400000

Total inventory cost 50000
Total hiring cost 6000
Total firing cost 0
Total cost 7456000
Work 40 h/week
Beginning workforce 50
Production per employer 1250 units/quarter
Hiring cost 200
Laid of cost 500
Carrying cost 1 $/units/quarter
Regular production cost 20 $/units
NO OVERTIME AND SUBCONTRACT
Chase demand Quarter 1 2 3 4
Starting inventory 0 0 0 0
Demand forcast 70000 100000 50000 150000
Production requirement 70000 100000 50000 150000
Workers needed 40 56 80 40 120
Workers hired 16 24 0 80
Workers laid of 0 0 40 0
Labor cost 700000 1000000 500000 1500000
Holding cost 0 0 0 0
Hiring cost 8000 12000 0 40000
Firing cost 0 0 20000 0

Total labor cost 3700000

Total inventory cost 0
Total hiring cost 60000
Total firing cost 20000
Total cost 3780000

Chase demand Quarter 1 2 3 4

Starting inventory 0 0 0 50000
Demand forcast 70000 100000 50000 150000
Production requirement 70000 100000 100000 100000
Workers needed 40 56 80 80 80
Workers hired 16 24 0 0
Workers laid of 0 0 0 0
Labor cost 700000 1000000 1000000 1000000
Holding cost 0 0 0 50000
Hiring cost 8000 12000 0 0
Firing cost 0 0 0 0

Total labor cost 3700000

Total inventory cost 50000
Total hiring cost 20000
Total firing cost 0
Total cost 3770000
Work 40 h/week
Beginning workforce 40
Production per employer 1250 units/quarter
Hiring cost 500
Laid of cost 500
Carrying cost 1 $/units/quarter
Regular production cost 10 $/units
NO OVERTIME AND SUBCONTRACT
Inventory holding cost/unit/month 35 Chase, hiring and laid of Month
Hiring and training cost/worker 1000 Demand
Layof cost/worker 2000 Workforce requirement 15
Labor hours required/month 160 hr No of hiring employment
Regular time cost/hour 2 Cost of hiring employment
Over time cost/hour 5 No of laid of employment
Marginal subcontracting cost/unit 70 Cost of laid of employment
Initial workforce size 15 workers Regular labor cost
Individual worker output 10 units Total cost 42680
Time to produce one unit 16 hr
Over time cost/unit 80 100 units/month, OT Month
Regular time cost/unit 32 Demand
Production
Workers needed 15
Workers hired
Workes laid of
Overtime production
Hiring cost
Firing cost
Overtime cost
Regular labor cost
Total cost 40400

100 units/month, outsource Month

Demand
Production
Workers needed 15
Workers hired
Workes laid of
Subcontract
Hiring cost
Firing cost
Subcontract cost
Regular labor cost
Total cost 39000

Conclusion: Option 3 is the best solution since its total cost is s

 Jan Feb Mar Apr May Jun
100 110 100 120 150 160
10 11 10 12 15 16
0 1 0 2 3 1
0 1000 0 2000 3000 1000
5 0 1 0 0 0
10000 0 2000 0 0 0
3200 3520 3200 3840 4800 5120

Jan Feb Mar Apr May Jun

100 110 100 120 150 160
100 100 100 100 100 100
10 10 10 10 10 10
0 0 0 0 0 0
5 0 0 0 0 0
0 10 0 20 50 60
0 0 0 0 0 0
10000 0 0 0 0 0
0 800 0 1600 4000 4800
3200 3200 3200 3200 3200 3200

Jan Feb Mar Apr May Jun

100 110 100 120 150 160
100 100 100 100 100 100
10 10 10 10 10 10
0 0 0 0 0 0
5 0 0 0 0 0
0 10 0 20 50 60
0 0 0 0 0 0
10000 0 0 0 0 0
0 700 0 1400 3500 4200
3200 3200 3200 3200 3200 3200

best solution since its total cost is smallest.

Regular time 2 $/skateboard Back orders Period 1 2
Overtime 3 $/skateboard Forecast 200 200
Subcontract 6 $/skateboard Production rate 300 300
Inventory 1 $/skateboard/period Beginning inventory 0 100
Back orders 5 $/skateboard/period Back orders 0 0
Initial workforce 15 workers Labor cost 600 600
Production per worker 20 units/worker/period Inventory cost 0 100
Back orders cost 0 0
Total cost 4700
 3 4 5 6
300 400 500 200
300 300 300 300
200 200 100 0
0 0 100 0
600 600 600 600
200 200 100 0
0 0 500 0
CONSTANT WORKFORE, safety stock Period Jan Feb
Demand 1800 1500
Work day 22 19
Work hours No of workers*h/day*days/month 7040 6080
Actual production Work hours/ (h/unit) 1408 1216
Beginning inventory 400 8
Begin inv. + Act. Pro - Demand -
Ending inventory Shortage of previous period 8 0
Safety stock 25% * Demand 450 375
Excess inventory Ending inv. - Beginning inv. 0 0
Demand + Shortage of previous
Shortage period - Begin inv. - Act. Pro 0 276
Holding cost Excess * holding cost/unit 0 0
Shortage cost Shortage * shortage cost/unit 0 1380
Labor cost Work hours * $/h RT 28160 24320
Total cost 28160 25700
Mar Apr May Jun No of workers 40
1100 900 1100 1600 Worker works 8 h/day
21 21 22 20 Labor 5 h/unit
6720 6720 7040 6400 4 $/h RT
1344 1344 1408 1280 6 $/h OT
0 0 412 720 Safety stock 25% Demand

0 412 720 400 Holding cost 1.5 $/unit/mo

275 225 275 400 Stockout cost 5 $/unit/mo
0 187 445 0

32 0 0 0
0 280.5 667.5 0
160 0 0 0
26880 26880 28160 25600
27040 27160.5 28827.5 25600 162488