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The following two questions (18-19) relate to the information below: January February March Forecast 3,200 3,200 3600 Working days 20 days 16 days 20 days
The following two questions (18-19) relate to the information below: January February March Forecast 3,200 3,200 3600 Working days 20 days 16 days 20 days . There are currently 55 workers in the beginning of January. Each worker can produce 4 units per day. The beginning inventory is 0. Stockout/backlogs are not allowed; meaning the demand in a month has to be met using the production in that month. Inventory carrying cost is $3 per unit per month .Subcontracting cost is $20 per unit If the firm follows the level strategy along with subcontracting for aggregate planning, what is the total subcontracting cost that will ensure zero inventory cost and allow the firm to employ minimum number of workers throughout the production period? O Since the level strategy implies that the firm produces all production in-house, there is no need for subcontracting. Hence, the subcontracting cost is $0 O $3,120 O $8,000 $12,800 O $20,800
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