1. Skycell, a major European cell phone manufacturer, is making production plans for the coming year. Skycell has work

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1. Skycell, a major European cell phone manufacturer, is making production plans for the coming year. Skycell has worked with its customers (the service providers) to come up with forecasts of monthly requirements (in thousands of phones) as follows:
Monthly Demand for Cell Phones in Thousands
January​​​1,000
February​​1,100
March​​​1,000
April​​​1,200
May​​​1,500
June​​​1,600
July​​​1,600
August​​​900
September​​1,100
October​​800
November​​1,400
December​​1,700
Manufacturing is primarily an assembly operation, and capacity is governed by the number of people on the production line. The plant operates for 20 days a month, eight hours each day. One person can assemble a phone every ten minutes. Workers are paid 20 euros per hour and a 50 percent premium for overtime. The plant currently employs 1,250 workers. Component costs for each cell phone total 20 euros. Given the rapid decline in component and finished-product prices, carrying inventory from one month to the next incurs a cost of 3 euros per phone per month. Overtime is limited to a maximum of 20 hours a month per employee. There is a no subcontracting option. Assume Skycell has a starting inventory of 50,000 units and wants to end the year with the same level of inventory. Skycell has a team of 50 people who are willing to work as seasonal employees. The cost of bringing them on is 800 euros per employee, and the layoff cost is 1,200 euros per employee.
A. What is the optimal production, hiring, and layoff schedule?
B. How does the optimal schedule change if the seasonal pool goes from 50 to 100?
C. Relative to having 1,250 permanent employees and 50 seasonal employees, will Skycell gain significantly if it carries only 1,100 permanent employees, but has 200 seasonal employees?
D. Consider the case in which Skytell has 1,250 permanent employees and 50 seasonal employees. Does Skytell gain more by eliminating its no-layoff policy for its permanent employees, or by increasing the seasonal employee pool from 50 to 100? Assume permanent employees can be hired or laid off at the same cost as the seasonal employees.