Why should shortages be an issue if demand is known

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Unformatted text preview: ges be an issue if demand is known? Other Costs: payroll, overtime, subcontracting. Other 5 Workforce Cost Workforce $ Cost Holding and Back-Order Costs Holding Slope = Ci Slope = CP Back-orders Positive inventory Inventory 6 Example The Densepack (manufacturer of disk drives) is The interested in determining work force and production levels for the next 6 month, starting January. Forecasted demands are 1280, 640, 900, 1200, 2000, and 1400. Ending inventory at the end of December is 500 and the firm would like to have 600 units on hand at the end of June. There are currently 300 workers employed in the plant. Find monthly production levels. Example Example Month 1(Jan) 2(Feb) 3(Mar) 4(Apr) 5(May) 6(June) Net Predicted Demand 780 640 900 1200 2000 2000 Net Cumulative Demand 780 1420 2320 3520 5520 7520 7 Costs Cost of hiring one worker - $500 Cost of firing one worker - $1000 Cost of holding one unit of inventory for one month - $80 Aggregate production units is the number of items Aggregate produced per worker. produced It is observed that for...
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