PT XYZ needs a proper Sales and operations planning to help firms provide better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a handle on the business. There will be a series of meetings, finishing with a high-level meeting where key intermediate-term decisions are made. Aggregate Production planning to translates annual and quarterly business plans into broad labor and output plans for the intermediate term is needed. Here is the Aggregate Production Planning Requirements Demand Forecast Beginning inventory New Workers hired Workers laid off Unit Overtime January 80,000 February 80,000 5,000 Assumption used: Hiring cost is $250 per workers Effort per unit is 6 hr /unit for production hours required Working hours per day is 8 hr Inventory cost per unit excess is $2 Subcontract cost per unit is $10 March 64,000 10,000 5,000 April 100,000 15,000 10 20 8,000 May 40,000 20,000 20 9,000 Layoff cost is $400 per workers Safety Stock is 15% from Demand Forecast Straight time cost is $5 x Production hours required Current available workers are 30 peoples, and it can be reduced to 10 during low demand seasons. Shortage cost is $5 June 80,000 5,000 30 20 10,000 Question: There are 4 types of production planning strategies as follows. You are required to recommend PT XYZ for which types is the most suitable for company and explain why. 1. Produce to exact monthly production requirements by varying workforce size 2. Produce to meet expected average demand by maintaining a constant workforce 3. Produce to meet the minimum expected demand using a constant workforce and subcontract to meet additional requirements 4. Produce to meet expected demand for all but the first two months using a constant workforce and use overtime to meet additional output requirements