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The Greenwood Furniture has received the following esfimates of demand requirements. Assuming regular production cosh of $40, one-time slock ot coshs for losh sales of
The Greenwood Furniture has received the following esfimates of demand requirements. Assuming regular production cosh of \$40, one-time slock ot coshs for losh sales of $100 per unit, inventory carrying coshs of $25 per unit per month and zero beginning and ending invenlory, evaluate the following plans and state the best one: (1) Plan A: Produce al a steady rate, equal to minimum requirements, and subcontract additional units at a $60 per unit cost. (2) Blan B: vary the workforce, to produce the prior month's demand. The firm produced 1,300 units in June. The cosh of hising additional workers is $3,000 per 100 units produced. The cosl of tayoffs is \$6,000 per 100 units cut back. (3) Plan C: Keep the currant workforce at a level capable of producing 1,300 units per month. Permit a maximum of 20% orertime at a rate of $40 per unit. Assume that warehouse limitations permit no more thah a 180 - unit carryover from month to month. This plan means that any time inventories react 180, the plant is kept idle. Idle time per unit is $60. Any additional needs are subcontracted al a cosl of $60 per
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