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

Jan.	1,400	May	2,200
Feb.	1,600	June	2,200
Mar.	1,800	July	1,800
Apr.	1,800	Aug.	1,800

A PLAN

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. The plan is called plan A.

Plan A: Vary the workforce level 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 B

Using the information in the Table above, develop plan B.

Produce at a constant rate 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.

PLAN C

Hill is now considering plan C: 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 the table. Plot the demand with a graph that also shows average requirements. Conduct your analysis for January through August.

PLAN D and PLAN E

Hills operations manager is also considering two mixed strategies for January August: Produce in overtime or subcontracting only when there is no inventory.

Plan D: Keep the current workforce stable at producing 1,600 units per month. Permit a maximum of 20% overtime at an additional cost of $50 per unit. A warehouse now constrains the maximum allowable inventory on hand to 400 units or less.

Plan E: Keep the current workforce, which is producing 1,600 units per month, and subcontract to meet the rest of the demand.

Evaluate plans D and E and make a recommendation.

Note: Do not produce in overtime if production or inventory are adequate to cover demand