You have been hired by management of the iTab Company to help determine a production plan for the next year. After studying the information you have collected (see Attachment 1), you decide to develop an Excel spreadsheet simulation (see Attachment 2 for a sample format). Specifically, you would like to use this application to address two issues:
- To recommend a production plan (Plan A) for the next 12 calendar months. Your plan must meet all the policy constraints as listed in Attachment 1 (e.g., hiring, firing, overtime, minimum workforce, demand, and minimum inventory). You have been given a minimum gross profit target for the next 12 months at $1,500,000.
- To study the impact of the policy that limits hiring to 30 percent, and firing to 10 percent, of the existing workforce. For this purpose, you will develop a production plan (Plan B) that lets management 1) increase the wage rate from $12/hour to $14/hour and firing cost from $650 to $800 per worker, and 2) be allowed to hire or fire as many people as it feels necessary in any month (all other constraints still hold, including the minimum workforce requirement). Management of iTab would like to see how a more flexible hiring/firing policy would influence profitability. Not knowing the precise impact of this policy change, management has set a minimum 12-month gross profit target at $1.4 million.