Chapter 2 discussed production planning for seasonal products in which demand is nonuniform throughout the year. One strategy discussed was to level production and build anticipation inventory for sale in the peak periods. This would result in the following:
• Lower overtime costs.
• Lower hiring and firing costs.
• Lower training costs.
• Lower subcontracting costs.
• Lower capacity required.
By leveling production, manufacturing can continually produce an amount equal to the average demand. The advantage of this strategy is that the costs of changing production levels are avoided. Figure 9.2 shows this strategy. LO.1