Consuelo Chua, Inc., is a disk drive manufacturer in need of an aggregate plan for July through December. The company has gathered the following data:

COSTS Holding cost $8/disk/month Subcontracting $80/disk Regular-time labor $12/hour Overtime labor $18/hour for hours above 8 hours/worker/day Hiring cost $40/worker Layoff cost $80/worker DEMAND*

July Aug. Sept. Oct. Nov. Dec.

400 500 550 700 800 700

*No costs are incurred for unmet demand, but unmet demand (backorders) must be handled in the following period. If half or more of a worker is needed, round up.

OTHER DATA Current workforce (June) 8 people Labor-hours/disk 4 hours Workdays/month 20 days Beginning inventory 150 disks**

No requirement for ending inventory 0 disks

**Note that there is no holding cost for June.

What will each of the two following strategies cost?

a) Vary the workforce so that production meets demand. Chua had eight workers on board in June.

b) Vary overtime only and use a constant workforce of eight. lop52