To:Richard Warner, CEO iWave Computers
CC:Kathy Smith, CFO
From:DSS Consulting Firm
Re:Production Plan Recommendation
Our consulting firm has exclusively prepared two profitable computer assembly production plans for your next 12 calendar months. We have meet your policy constraints, including workforce, inventory, overtime, hiring, firing, and demand. We have valuated all your cost including and find that these to plans have a very profitable outcome. According to the research of your financial records by your company managers, we find that your previous production plans have been inefficient. These drastic inefficiencies have resulted in loss of sales due to insufficient inventory or excessive inventory carrying cost due to overstocking. We have developed a production plan based on expected demand of microcomputers. We have also incorporated regular and overtime workforce levels in to the plans. According to your management, we have used units of computers as an aggregate measure of production capacity. Our first plan (Plan A) includes hiring 4 new employees in January to cover the 2100 units of demand but firing them in February, we will fire these additional employees because the production would be covered. In March, April, and May will fire 4, 3, 3, employees respectively. By doing so, the labor costs are significantly reduced and the unit demand will be covered. In June we neither hire nor fire because our units of demand are covered. However, in July, and August, unit demand picks up and we will hire 5, and 7 employees respectively. In September we fire 4 employees and October we fire 2 employees cutting our labor cost, but still reaching our unit demand. In November we hire 7 employees due to the increase of Holiday sales, and in December we hire 6 employees. By doing so we have a Gross profit of $1,125,189 Our Second plan (Plan B) includes hiring 4 new employees in January to cover the 2100 units of demand. In...