Example 2.3-6 (Multiperiod Production Smoothing Model)
A company will manufacture a product for the next four months: March, April, May, and June.
The demands for each month are 520, 720, 520, and 620 units, respectively. The company has a
steady workforce of 10 employees but can meet fluctuating production needs by hiring and firing temporary workers, if necessary.The extra costs of hiring and firing in any month are $200
and $400 per worker, respectively. A permanent worker can produce 12 units per month, and a
temporary worker, lacking comparable experience, only produce 10 units per month.TIle company can produce more than needed in any month and carry the surplus over to a succeeding
month at a holding cost of $50 per unit per month. Develop an optimal hiring/firing policy for
the company over the four-month planning horizon.
Example 2.3-6 (Multiperiod Production Smoothing Model)
A company will manufacture a product for the next four months: March, April, May, and June.
The demands for each month are 520, 720, 520, and 620 units, respectively. The company has a
steady workforce of 10 employees but can meet fluctuating production needs by hiring and firing temporary workers, if necessary.The extra costs of hiring and firing in any month are $200
and $400 per worker, respectively. A permanent worker can produce 12 units per month, and a
temporary worker, lacking comparable experience, only produce 10 units per month.TIle company can produce more than needed in any month and carry the surplus over to a succeeding
month at a holding cost of $50 per unit per month. Develop an optimal hiring/firing policy for
the company over the four-month planning horizon.
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