• • • 13.7 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:

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.

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Holding cost Subcontracting Regular-time labor Overtime labor Hiring cost Layoff cost COSTS $8/disk/month $80/disk $12/hour $18/hour for hours above 8 hours/worker/day $40/worker $80/worker DEMAND* July Aug. Sept. 400 500 550 Oct. Nov. Dec. 700 800 700 *No costs are incurred for unmet demand, but unmet demand (back- orders) 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 4 hours Labor-hours/disk Workdays/month Beginning inventory No requirement for ending inventory **Note that there is no holding cost for June. 20 days 150 disks** O disks