Q1) The president of Hill Enterprises, Terri Hill, projects the firms aggregate demand requirements over the next 8 months as follows:

Her operations manager is considering a new plan, which begins in January with 200 units on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-time costs

a) Plan A. Produce at a constant rate (level strategy) of 1,400 units per month, which will meet minimum demands. Then use subcontracting, with additional units at a premium price of $75 per unit. Evaluate this plan by computing the costs for January through August.

b) Plan B) Keep a stable workforce by maintaining a constant production rate equal to the average requirements and allow varying inventory levels. Beginning inventory, stockout costs, and holding costs are provided in Table.

c ) Plan C: Vary the workforce level (chase strategy) to execute a strategy that produces the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $5,000 per 100 units. The cost of laying off workers is $7,500 per 100 units. Evaluate this plan.

Note: Both hiring and layoff costs are incurred in the month of the change. For example, going from 1,600 in January to 1,400 in February incurs a cost of layoff for 200 units in February.

Plan A (Constant Workforce)	Period	Expected Demand	Production	Ending Inventory (units)	Subcontractor (units)
	Dec	1600		200
	1 (Jan)	1400	1400
	2 (Feb)	1600	1400
	3 (Mar)	1800	1400
	4 (Apr)	1800	1400
	5 (May)	2200	1400
	6 (Jun)	2200	1400
	7 (Jul)	1800	1400
	8 (Aug)	1800	1400
	Total Cost
					Plan A Cost
Plan B (Level Strategy)	Period	Expected Demand	Production	Ending Inventory (units)
	Dec	1600		200
	1 (Jan)	1400	1,825
	2 (Feb)	1600	1,825
	3 (Mar)	1800	1,825
	4 (Apr)	1800	1,825
	5 (May)	2200	1,825
	6 (Jun)	2200	1,825
	7 (Jul)	1800	1,825
	8 (Aug)	1800	1,825
	Total Cost
		1825			Plan B Cost

show in excel.