13.9 Mary Rhodes, operations manager at Burnaby Furniture, has received the following estimates of demand requirements: July Aug. Sept. Oct. Nov. Dec 1,000 1,200 1,400 1,800 1,800 1,600 Assuming stockout costs for lost sales of $100, inventory carrying costs of $25 per unit per month, and zero ending inventory. a) Evaluate these two plans on an incremental basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,000 units per month and subcontract additional units at a $60 per unit premium cost. Plan B: Vary the workforce, which performs at a current production level of 1,300 units per month. The cost of hiring additional workers is $3,000 per 100 units produced. The cost of layoffs is $6,000 per 100 units cut back. b) Which plan is the best and why? 13.10 Mary Rhodes (see Problem 13.9) is considering two more mixed strategies. Using the data in Problem 13.9, compare plans C and D with plans A and B and make a recommendation. Plan C: Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the remainder to meet demand. Assume that 300 units remaining from June are available in July. Plan D: Keep the current workforce at a level capable of producing 1,300 units per month. Permit a maximum of 20% overtime at a premium of $40 per unit. Assume that the warehouse limitations permit no more than a 180-unit carryover from month to month. This plan means that any time inventories reach 180, the plant is kept idle. Idle time per unit is $60. Any additional needs are subcontracted at a cost of $60 per incremental unit