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Input: Beg. Wkrs 22 Regular $40 Hiring $2,500 Unit/wkr 100 Overtime $60 Firing $3,000 Beg. Inv. 0 Subk $75 Inventory $7 Month Demand Reg OT

Input: Beg. Wkrs 22 Regular $40 Hiring $2,500
Unit/wkr 100 Overtime $60 Firing $3,000
Beg. Inv. 0 Subk $75 Inventory $7
Month Demand Reg OT Subk Inv #Wkrs #Hired #Fired
Apr 1300
May 1100
Jun 700
Jul 500
Aug 500
Sep 1000
Oct 1200
Nov 1200
Dec 5000
Jan 5600
Feb 7600
Mar 4300
Total 30000

BlueFans is a small company that manufactures fans. Large variations in demand due to seasonality have contributed to high costs for the company. BlueFans currently uses a level production strategy because it prefers not to hire and fire employees. However, if there is enough cost justification, the company will consider alternative production plans.

What is the cost of the current production plan? Justify your answer.

How much would BlueFans save (difference between the cost in a and the cost in b) by using a chase demand strategy? Justify your answer.

How much would BlueFans save (difference between the cost in a and the cost in c) by keeping a steady workforce of 20 workers and supplementing with over-time and subcontracting as needed.

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