Aggregate Planning

Following is the information about demand forecast and working days for the next six months.

	Jan	Feb	Mar	Apr	May	June	Total
Demand forecast	1,440	1,280	1,280	1,920	2,080	1,600	9,600
Working days	20	20	20	20	20	20	120

Relevant cost information is provided:

Inventory carrying cost	$5/unit/month
Subcontracting cost	$16/unit
Pay rate	$10/hr (=$80/day) No overtime allowed
Labor hours required	1 hour/unit
Hiring & training cost	$500/worker
Layoff cost	$900/worker

This company is considering the three options:

1. Constant production rate through the six months
2. Subcontracting (outsourcing production above the minimum requirement)
3. Chase strategy by hiring and laying off workers.

As an operations manager at this company, which option would you choose?