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During the next Six months, the BestOption Company must meet the following demands) for pairs of hand-craft shoes: 3000 in month 1, 4000 in month 2, 2000 in month 3, and 2500 in month 4, 3000 in month 5 and 3200 in month 6. At the beginning of the first month, 500 pairs of shoes are on hand, and BestOption currently has 60 workers. A worker is paid $10 regular wage per workhour and works up to 160 hours per month at regular wage. The labor cost in production is paid in hours that workers work. Each worker can work overtime when exceeding 160 hours in a month and receives $15 per hour for overtime. A worker can work up to 20 hours of overtime per month. It takes 4 hours of labor to produce a pair of shoes. At the beginning of each month, workers can be hired or fired. Each hired worker costs $1600, and each fired worker costs $2000. At the end of each month, a holding cost of $3 per pair of shoes left in inventory is incurred. Backorder cost is $15 per pair per month. The firm can also use a subcontractor to make up some production. The subcontracting cost is $75 per pair which has a maximal capacity of 500 pairs per month.

BestOption decides they will maintain a stable workforce for their total demand of 17700 units in the following 6 months. Since17700*4 (hr/unit)/(160 hr/mo *6 mo) = 73.75, they will hire 74 workers every months. BestOption will choose to produce up to its maximum labor hour and build inventory when its necessary. The ending inventory at month 6 is set to have 0 units. Stockout and Inventory are used in this option and no overtime or subcontracting will be used. Please calculate the total cost of this aggregate production plan.

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