Question

Mamas Stuffin is a popular food item during the fall and winter months, but it is marginal in the spring and summer. The demand forecast and cost data for Mamas Stuffin is presented in the table and the additional information below.

Month	Demand Forecast
March	2000
April	1000
May	1000
June	1000
July	1000
August	1500
September	2500
October	3000
November	9000
December	7000
January	4000
February	3000

Overtime capacity per month - Regular production

Subcontracting capacity per month - Unlimited

Regular production cost - GHS30 per pallet

Overtime production cost - GHS40 per pallet

Subcontracting cost - GHS50 per pallet

Holding cost - GHS2 per pallet

Beginning workforce - 10 workers

Production rate - 200 pallets per worker per month

Hiring cost - GHS5000 per worker

Firing cost - GHS8000 per worker

Evaluate the cost under each of the following production planning strategies for Mamas Stuffin:

1. Level production over the 12 months. (15 marks)

1. Keep the workforce at its current level and supplement with overtime and subcontracting as and when necessary. (15 marks)