1. Shamsiah Artpillow Inc., producer of craft pillows, develop monthly forecast for their products. The company would like to begin development of an aggregate plan. The company has gathered the following data:

COSTS
Holding Cost	RM8/pillow/month
Subcontracting	RM80/pillow
Regular-time labor	RM12/hour
Overtime labor	RM18/hour for hours above 8 hours/worker/day
Hiring cost	RM40/worker
Layoff cost	RM80/worker

DEMAND
July	400
August	500
September	550
October	700
November	800
December	700

OTHER DATA
Current workforce	8 people
Labour-hour/disk	4 hours
Workdays/month	20 days

Determine the cost of the following strategies.

1. Vary the workforce so that production meets demand.

(12 marks)

1. Vary subcontracting unit and use a constant worforce of eight (8).

(6 marks)

1. Which strategy is the best option? (the least total cost)

(2 marks)