1200 21 Demand forecast 900 1500 700 18 800 1100 Working days per month 21 20 Plan 1: Produce to exact monthly production requirements using a regular eight-hour day by varying workforce size (Chase Strategy) Plan 2: Produce to meet expected average demand over the next six months by maintaining a constant workforce (Level Strategy) Plan 3: Produce to meet minimum expected demand using a constant workforce on regular time. Subcontract to meet additional requirements Plan 4: Produce to meet expected demand for all but the first two months using a constant workforce on regular time. Use overtime to meet demand forecast Initial inventory Inventory holding cost Subcontracting cost per unit Straight-time cost Overtime cost Labor hours required Hiring and training cost Laying off cost Stock-out cost 0 unit $5 per unit per month $20 per unt $10 per hour ($80 per day, i.e.,8 working hours per day) $17 per hour (above 8 hours per day) 16 hours per unit 1,500 per worker 3,000 per worker $10 per unit Initial workforce Initial workforce Initial workforce for plan 2 for plan 3 for plan4 7 Aggregate Production Requirements Jan Feb Total Beginning inventory Demand forecast Safety stock (096 of monthly demand) Production requirement 800 1200 1500 100 6200 inv Plan 1: Vary workforce Jan Feb Mar Jun Total Beginning inventory Demand forecast Production requirement Ending inventory Inventory holding cost Production hours required Working days per month Hours per month per worker Workers required New workers hired 900 700 800 1200 1500 1100 6200 (initial workforce Workers required in Jan) Hiring cost Workers laid off Layoff cost Total cost Plan 2: Vary inventory& Stockout Apr Jan Feb Mar May Jun Total Beginning inventory Working days per month Production hours available Actual production Demand forecast Ending inventory Shortage cost Inventory holding cost 0 0 900 700 800 1200 1500 1100 6200 Total cost Plan 3: Constant low workforce & subcontract Jan Feb Mar Jun Total Beginning inventory Production requirement Working days per month Production hours available Actual production Units subcontracted Suncontracting cost Demand forecast Ending inventory Shortage cost Inventory holding cost Straight-time cost 0 700 800 1200 1500 1100 6200 Total cost Plan 4: Constant workforce & overtime Jan Feb Mar Jun Total Beginning inventory Working days per month Production hours available Regular shift production Demand forecast Units overtime Orvertime cost Ending inventory Inventory holding cost Straight-time cost 0 0 0 0 900 700 800 1200 1500 1100 6200 Total cost