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Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters Quarter Demand Previous quarter's output 1500 units 1 1300
Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters
Quarter |
Demand |
Previous quarter's output |
1500 units |
1 | 1300 | Beginning inventory | 200 units |
2 | 1400 | Stockout cost | $50 per unit |
3 | 1500 | Inventory holding cost | $10 per unit at end of quarter |
4 | 1300 | Hiring workers | $4 per unit |
Laying off workers | $8 per unit | ||
Unit cost | $30 per unit | ||
Overtime
Which of the following production plans is better: Plan Achase demand by hiring and layoffs; or Plan Bproduce at a constant rate of 1200 and obtain the remainder from overtime?
| $10 extra per unit
|
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