There are a few key points here.

1. We must choose decision variables such that the objective function and all
constraints are linear. If we choose pt = average pairs of shoes produced per
worker, then the first inventory constraint will be p1(x1+x3+x4), which is not
linear.
2. We have chosen decision variables for people hired at the beginning of a
given quarter because, intuitively, that's what you can "decide" as the owner of
the company. Once someone is hired, you can't choose whether to pay them or
not, and you might not be able to fire them (labour laws stipulate that
terminations are justified). This also gives us enough information to compute
where we will be spending money every month (if we assume each employee
works the quarter hired, and the two quarters immediately after).
3. The last inventory constraint stipulates that ending inventory should be
zero. Of course, we still have to satisfy the relationship that inv(4) = inv(3) +
prod(4) - demand(4). What we have to do in this case, is satisfy inv(4) = 0 =
inv(3) + prod(4) - demand(4). Thus, inv(3) + prod(4) = demand(4), and we get
the constraint i3 + p4 = 100.
LINDO code:
!! Let
!! xt = number of workers hired at the start of quarter t (Qt)
!! it = pairs of shoes in inventory at the end of Qt
!! pt = pairs of shoes produced in Qt
!! (t = 1,2,3,4)
MIN 1500x1 + 1500x2 + 1500x3 + 1500x4 + 50i1 + 50i2 + 50i3 + 50i4
SUBJECT TO
i0 = 0
!! starting inventory assumption
p1 - i1 = 600
!! Q1 inventory
p2 + i1 - i2 = 300
!! Q2 inventory
p3 + i2 - i3 = 800
!! Q3 inventory
p4 + i3 = 100
!! Q4 inventory is 0
50x1 + 50x3 + 50x4 - p1 >= 0
!! Q1 production within workers'
limits
50x1 + 50x2 + 50x4 - p2 >= 0
!! Q2 production within workers'
limits
50x1 + 50x2 + 50x3 - p3 >= 0
!! Q3 production within workers'
limits
50x2 + 50x3 + 50x4 - p4 >= 0
!! Q4 production within workers'
limits
!! sign constraints: all variables >= 0 (automatic in LINDO)

LINDO output:
LP OPTIMUM FOUND AT STEP
6
OBJECTIVE FUNCTION VALUE
1)
24000.00
VARIABLE
VALUE
REDUCED COST
X1
14.000000
0.000000
X2
0.000000
0.000000
X3
2.000000
0.000000
X4
0.000000
1500.000000

I1
I2
I3
I4
I0
P1
P2
P3
P4

0.000000
0.000000
0.000000
0.000000
0.000000
600.000000
300.000000
800.000000
100.000000

50.000000
20.000000
80.000000
50.000000
0.000000
0.000000
0.000000
0.000000
0.000000

There are a few key points here.

1. We must choose decision variables such that the objective function and
all constraints are linear. If we choose pt = average pairs of shoes produced
per worker, then the first inventory constraint will be p1(x1+x3+x4), which
is not linear.
2. We have chosen decision variables for people hired at the beginning of a
given quarter because, intuitively, that's what you can "decide" as the
owner of the company. Once someone is hired, you can't choose whether to
pay them or not, and you might not be able to fire them (labour laws
stipulate that terminations are justified). This also gives us enough
information to compute where we will be spending money every month (if
we assume each employee works the quarter hired, and the two quarters
immediately after).
3. The last inventory constraint stipulates that ending inventory should be
zero. Of course, we still have to satisfy the relationship that inv(4) = inv(3)
+ prod(4) - demand(4). What we have to do in this case, is satisfy inv(4) = 0
= inv(3) + prod(4) - demand(4). Thus, inv(3) + prod(4) = demand(4), and
we get the constraint i3 + p4 = 100.
LINDO code:
!! Let
!! xt = number of workers hired at the start of quarter t (Qt)
!! it = pairs of shoes in inventory at the end of Qt
!! pt = pairs of shoes produced in Qt
!! (t = 1,2,3,4)
MIN 1500x1 + 1500x2 + 1500x3 + 1500x4 + 50i1 + 50i2 + 50i3 + 50i4
SUBJECT TO
i0 = 0
p1 - i1 = 600

!! starting inventory assumption

!! Q1 inventory

p2 + i1 - i2 = 300

!! Q2 inventory

p3 + i2 - i3 = 800

!! Q3 inventory

p4 + i3 = 100

!! Q4 inventory is 0

50x1 + 50x3 + 50x4 - p1 >= 0 !! Q1 production within workers' limits

50x1 + 50x2 + 50x4 - p2 >= 0 !! Q2 production within workers' limits
50x1 + 50x2 + 50x3 - p3 >= 0 !! Q3 production within workers' limits
50x2 + 50x3 + 50x4 - p4 >= 0 !! Q4 production within workers' limits
!! sign constraints: all variables >= 0 (automatic in LINDO)
LINDO output:
LP OPTIMUM FOUND AT STEP

OBJECTIVE FUNCTION VALUE

1)

24000.00

VARIABLE

VALUE

REDUCED COST

X1

14.000000

0.000000

X2

0.000000

0.000000

X3

2.000000

0.000000

X4

0.000000

1500.000000

I1

0.000000

50.000000

I2

0.000000

20.000000

I3

0.000000

80.000000

I4

0.000000

50.000000

I0

0.000000

0.000000

P1

600.000000

0.000000

P2

300.000000

0.000000

P3

800.000000

0.000000

P4

100.000000

0.000000