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The current aggregate demand requirements for a firm are shown below for the next six months:...

The current aggregate demand requirements for a firm are shown below for the next six months:

Month May June July Aug Sept Oct
Demand 270 250 250 250 280 300


The firm always plans to meet all demand. The firm currently has 270 workers capable of producing 270 units in a month (1 unit/worker). The workforce can be increased (at a cost of $700 per worker) or decreased (at a cost of $1,400 per worker). Inventory holding cost is $175 per unit per month. The firm currently has 30 units of inventory on hand, and it would like to have 30 units available at the end of each month. Regular production cost is $3,750 per unit. Assume hiring and layoff/firing, if necessary, occur at the beginning of the month.

a.

What should the aggregate plan be if the inventory holding cost is to be minimized? (Leave no cells blank - be certain to enter "0" wherever required.)

Month Demand Regular Production Ending Inventory Number of Workers Hire Fire
May 270 270
June 250 250
July 250 250
August 250 250
September 280 280
October 300 300
Total 1,600 1,600

b. What is the cost of this plan?

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