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A company as the following aggregate demand requirements and other data for the upcoming four quarters: Quarter Aggregate Demand ('000) Stock-out cost 5 per unit
A company as the following aggregate demand requirements and other data for the upcoming four quarters:
Quarter | Aggregate Demand ('000) | Stock-out cost | 5 per unit |
1 | 350 | Inventory holding cost | 1.5 per unit at end of quarter |
2 | 500 | Hiring workers | 500 |
3 | 900 | Firing workers | 250 |
4 | 400 | Labour standard per unit | 0.3 hours |
The beginning inventory in the first quarter is 130, 500 units for the Level Capacity plan, while the beginning inventory in the first quarter is zero for the Chasing Demand Plan. The working days per quarter are 60. Which of the following production plans is better: Plan A - Chase Demand by hiring and firing or Plan B - Level Capacity with inventory?
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