Hill’s operations manager (see Problems 13.3 through 13.5) is also considering two mixed strategies for January–

August: Produce in overtime or subcontracting only when there is no inventory.

◆ Plan D: Keep the current workforce stable at producing 1,600 units per month. Permit a maximum of 20% overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 400 units or less.

◆ Plan E: Keep the current workforce, which is producing 1,600 units per month, and subcontract to meet the rest of the demand.

Evaluate plans D and E and make a recommendation.

Note: Do not produce in overtime if production or inventory are adequate to cover demand.