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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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