For the past 5 years, Archer's Burgers has produced frozen vegan burger patties via a combination of in-house manufacturing and subcontracting. Their 'historical plan' has always been to hold staffing steady and make 500 cases per month (Previous Output) via regular time production at a cost of $55 per case. They then utilized inventory and subcontracting to meet any additional monthly demand, as backorders are not acceptable to their customers. The subcontractor, normally a direct competitor, charges Archer's $75 per case. There is currently no inventory. Looking ahead, the operations manager forecasts demand of:

Jan Feb March April May June

500 600 500 700 500 600

What would the costs be to continue to follow the 'historical plan'?

The operations manager is considering a second plan. In this scenario, the plant will increase regular time production to 600 units per month for the first 5 months (January-May), then drop back to 400 units in June. The cost of increasing or decreasing capacity is $5 per unit of increase or decrease. Inventory costs $10 per case per month. (Note: this plan does not result in any lost sales.)

What is the cost of the second plan?

The final plan (which includes all costs and demands mentioned so far) would be to produce 550 units per month regular time, and outstource only when necessary to avoid any lost sales.

What is the cost of plan 3?

Based on costs, which plan should be chosen