154 Chapter Three Sales ond Operations Plamsng TABLE 3-1_Agaregate Plan for Densepack Obtained from Rounding the Linear Programming Solution A 8 € . E F 6 # ‘Number Number of Units Ending Number of Number Number of Units Produced Cumulative Cumulative Inventory Month Workers Hired Fired per Worker (Bx E) Production NetDemand _(G ~ H) | January 273 a 2.931 800 300, 730 20 February 273 3.517 960 1,760 1,420 340 | ‘March 223 2.638 720 2,480 2,320 160 | Apail 273 3810 1,040 3,520 3,520 0 May 738 465 3224 2379 5,899 51520 373 June 738 2198 = (1,622, 7,521 71520 1 Totals 46527 900, ‘The value of the objective function at the optimal solution is 379,292.22,which is considerabiy less than that achieved with either the zero inventory plan or the constant ‘workforce plan. However, this cost is based on fractional values of the variables, The actual cost will be stightly higher after rounding Following the rounding procedure recommended eatlier, we will round all the values of #7, to the next higher integer. That gives 1?) =-+ = Wy = 273 and Ws = 1g = 738. This determines the values of the other problem variables, This means that the firm should fire 27 workers in January and hire 465 workers in May, The complete solution is given in Table 3-6. ‘Again, because column H in Table 3-1 corresponds to net demand, we add the 600 units of ending inventory in June, giving a total inventory of 900 + 600 = 1,500 units. Hence, the total cost of this plan is (500)(465) + (1,000)27) + (80)(1,500) = $379,500, which represents a substantial savings over both the zero inventory plan and the constant workforce plan. “The tesults of the linear programming analysis suggest another plan that might be ‘more suitable for the company. Because the optimal strategy is to decrease the work- force in January and build it back up again in May, a reasonable alternative might be to not fire the 27 workers in January and to hire fewer workers in May. In this case, the most efficient method for finding the correct number of workers to hire in May is to simply re-solve the linear program, but without the variables Fj...» Fey as no firing of workers means that these variables are forced to zero. (If you wish to avoid reentering the problem into the computer, simply append the old formulation | with the constraints F = 0, Fy = 0, ..., Fs = 0.) The optimal number of workers to hire in May turns out to be 374 if no workers are fired, and the cost ofthe plan is approximately $386,120. This is only slightly mote expensive than the optimal plan, and bas the important advantage of not requiting the firing of any workers, Problems for Section 3.5 24, Mr. Meadows Cookie Company makes a variety of chocolate chip cookies in the plant in Albion, Michigan, Based on orders received and forecasts of buy- ing habits, it is estimated that the demand for the next four months is $50,28. 26. 3.5 Solicg Agregte Panne Problons 155 1,260, S10, and 980, expressed in thousands of cookies. During a 46-day period when there were 120 workers, the company produced 1,7 million cook- ies. Assume that the number of workdays over the four months are respectively 26, 24, 20, and 16. There are currently 100 workers employed, and there is no starting inventory of cookies, 4a, What is the minimum constant workforce required to meet demand over the next four months? 5, Assume that cj = 10 cents per cookie per month, cy; = $100, and c= $200. Evaluate the cost ofthe plan derived in part (a). c. Formulate asa linear program. Be sure 10 define all variables and include the required constraints 4d. Solve for the optimal solution. Harold Grey owns a small farm inthe Salinas Valley that grows apricots. The apri- cots are dried on the premises and sold to a number of large supermarket chains Based on past experience and committed contracts, he estimates that sales over the next five years in thousands of packages will be as follows: Forecasted Demand Year __ (thousands of packages) 300 120 200 110 135 Assume that each worker stays on the job for at east one year, and that Grey currently has three workers on the payroll. He estimates that he will have 20,000 packages on hand at the end of the current year. Assume that, on the average, each worker is paid $25,000 per year and is responsible for producing 30,000 pack- ages. Inventory costs 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, Farmer Grey estimates that it costs $500 for each worker hired, Severance pay amounts to $1,000 per worker. a. Assuming that shortages are not allowed, determine the minimum constant ‘workforce that he will need over the next five years. +. Evaluate the cost of the plan found in part (a). . Formulate this as a linear program. d,Solve the problem and round-off the solution and determine the cost of the resulting plan A local semiconductor firm, Superchip, is planning its workforce and production levels over the next year. The firm makes a variety of microprocessors and uses sales dottars as its aggregate production measure. Based on orders received