There are two ways in which you can fix this problem

1. When any appliance is on fire (e.g oven or drier) then just quit the game and when you restart the game again you will notice that the fire is already out. You can then continue with your work, without having to trouble yourself with the little people shouting "fire".
2. You would need the extinguisher placed in the shed. To open the shed:Select one of your people and transfer them to the top right of the sandbox to pick up the shed doorknob. The sandbox is outside the house and to the right of the office at the front of the house.After the doorknob is on the shed, transfer one of your friends to the welcome doormat outside the front door where they will pick up a key and open the shed door.