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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 | Stock-out 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 | $10 extra per unit |
What is the cost of the following plans:
a. Plan Achase demand by hiring and layoffs.
b. Plan Bproduce at a constant rate of 1200 and obtain the remainder from overtime.
c. What plan would you choose?
please also explain why the ending inventory for plan B is 100?
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