Problem 2: Production Planning Tech manufactures and sells portable reading devices. At the beginning of month 1, the company has $100,000 and 15 employees. Each machine the company owns has the capacity to make up to 90 products per month, and each worker can make up to 600 products per month (both workers and machines are necessary for production). The company can't use more labor or machine capacity than is available in any given month. Also, the company wants to have a non-negative cash balance at all points in time. The company's costs are as follows: Holding cost of $2 each month per product in ending inventory Cost in month 1 of buying machines is $3000/machine Monthly worker wage of $3500 Hiring cost of $4000 per worker Firing cost of $5000 per worker In the absence of advertising, the monthly demands in months 1 through 6 are forecasted to be 5000, 8000, 7000, 6000, 5000, and 5000. However, Tech can increase demand each month by advertising. Every $10 (up to a maximum of $50,000 per month) spent on advertising during a month increases demand for that month by one product. The devices are sold for $75 each.
A) True
B) False
