A key hospital supplier, IVs Plus (IVP) located in Salina, KS, sells IV tubing and stands to hospitals and clinics. Sales have picked up ever since they introduced their newest "Squeaky Clean" IV stand, which eliminates all oils and germs left behind by users. Though IVP sells these stands all year long, they sell the most during the summer months, when end-of-fiscal year purchases are at a peak. The demand over the next 12 months is shown in the table below. Use the demand forecasts and determine the lowest cost production plan.

Month Jan Feb March April May June	Demand Forecast 133,067 155,026 168,200 173,890 202,759 260,842	Month July August Sept Octo Nov Dec	Demand Forecast 251,630 269,630 200,312 160,830 145,266 128,900

Regular production cost (labor and material)$48 per unit Holding cost $13 per unit per month based on ending inventory Backorder cost. $17.00 per unit per month based on ending inventory Beginning Inventory 430,000 units Beginning workforce 18 employees Regular production rate 9,600 units per employee per month Hiring cost $14,000 per worker Firing cost $16,000 per worker

Ending inventory for December should be as low as possible.

Question 1.

How many units are produced for the year using the level production strategy?

Less than 1,900,000

Between 1,900,000 and 2,100,000

Between 2,100,001 and 2,300,000

More than 2,300,000

Question 2.

After hiring or firing any workers in the first month, how many workers are required throughout the year following the level production strategy?

15

16

17

18

Question 3.

What are the total costs incurred following the level production strategy?

Less than $123,000,000

Between $123,000,001 and $123,100,000

Between $123,100,001 and $123,200,000

Greater than $123,200,001