The spreadsheet shows a CHASE strategy for a single product company's production plan over the next 12 months.

THERE ARE TWO PARTS TO THIS:

FIRST - Construct a spreadsheet that INSTEAD uses a LEVEL PRODUCTION PLAN with the same number of employees over all 12 months and with the beginning and ending inventories both equal to 175,000 units.

NEXT - Answer the following questions:

1. What is the selling price per unit?

2. What is the cost (inventory value) per unit?

3. How many employees are needed for the 12 month Level Production Plan?

4. What is the total cost of hiring, layoffs, and inventory carrying costs for the 12 month Level Production Plan?

5. What are the savings in the total cost of hiring, layoffs, and inventory carrying costs for the 12 month Level Production Plan relative to the 12 Month Chase Production Plan?

Chase Demand Strategy Plan History November Plan June Future January October December January February March April Mayl July August September October November December 6.9 276 7.1 2841 8.2 328 9.4 376 10.7 4281 7.9 316 8.6 344 11.3 4521 13.8 552 538 -14 13.4 5361 14.1 5641 15.8 6321 12.1 484 8.0 320 15.4 616 631 15 1 12.5 500 503 3 4 552 2,515 22 556 4 276 1,380 20 284 1,352 21 328 1,426 23 376 1,880 20 428 1,945 22 316 1,436 22 344 3,440 10 452 1,965 23 536 2,680 20 564 2,564 22 632 3,160 20 484 2,420 20 20 Sales Plan in million 5) (in 1,000 units) Actual (in 1,000 units) Difference month Difference cumulative Operations Plan (in 1,000 units) (in employees) Number working days/mo. Actual (in 1,000 units) Diff, month dift, cumulative Inventory Plan in 1,000 units) (in million 5) Actual (in 1,000 units) Days of supply Employee Productivity Hiring Cost Layoff Cost Inventory carrying cost Minimum inventory level Beginning labor force 616 2,988 20 645 29 33 500 2,380 20 466 -34 -1 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 9.3 9.0 12.2 5.1 8.9 6.5 6.8 5.5 7.2 10.9 73.7 00 453.9 0.0 65.5 0.0 0.0 509.1 2003.6 0.0 0.0 1474.8 714.8 0.0 0.0 116.4 596.4 0.0 0.0 740.0 200 200 200 175 175 3.0 3.0 3.0 2.6 2.6 198 212 175 6.3 8.4 12.7 12.9 12.3 10 Units/day $500 per employee Hires 0.0 0.0 $1,000 per employee Layoffs 1000.0 27.6 2.096 per month (applied to the monthly ending inventory) days of supply employees Cost of: January February Hiring $0 $0 Layoffs $1,000,000 $27,619 Inventory $52,500 $52,500 March $36,853 $0 $52,500 April $226,957 SO $52,500 May June July August September $32,727 $0 $1,001,818 $0 $357,391 $0 $509,091 $0 $1,474,783 SO $52,500 $52,500 $52,500 $52,500 $52,500 October November December Totals $0 $298,182 So $1,953,928 $116,364 $0 $740,000 $3,867,856 $52,500 $52,500 $52,500 $630,000 Total Cost $6,451,784 Chase Demand Strategy Plan History November Plan June Future January October December January February March April Mayl July August September October November December 6.9 276 7.1 2841 8.2 328 9.4 376 10.7 4281 7.9 316 8.6 344 11.3 4521 13.8 552 538 -14 13.4 5361 14.1 5641 15.8 6321 12.1 484 8.0 320 15.4 616 631 15 1 12.5 500 503 3 4 552 2,515 22 556 4 276 1,380 20 284 1,352 21 328 1,426 23 376 1,880 20 428 1,945 22 316 1,436 22 344 3,440 10 452 1,965 23 536 2,680 20 564 2,564 22 632 3,160 20 484 2,420 20 20 Sales Plan in million 5) (in 1,000 units) Actual (in 1,000 units) Difference month Difference cumulative Operations Plan (in 1,000 units) (in employees) Number working days/mo. Actual (in 1,000 units) Diff, month dift, cumulative Inventory Plan in 1,000 units) (in million 5) Actual (in 1,000 units) Days of supply Employee Productivity Hiring Cost Layoff Cost Inventory carrying cost Minimum inventory level Beginning labor force 616 2,988 20 645 29 33 500 2,380 20 466 -34 -1 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 175 2.6 9.3 9.0 12.2 5.1 8.9 6.5 6.8 5.5 7.2 10.9 73.7 00 453.9 0.0 65.5 0.0 0.0 509.1 2003.6 0.0 0.0 1474.8 714.8 0.0 0.0 116.4 596.4 0.0 0.0 740.0 200 200 200 175 175 3.0 3.0 3.0 2.6 2.6 198 212 175 6.3 8.4 12.7 12.9 12.3 10 Units/day $500 per employee Hires 0.0 0.0 $1,000 per employee Layoffs 1000.0 27.6 2.096 per month (applied to the monthly ending inventory) days of supply employees Cost of: January February Hiring $0 $0 Layoffs $1,000,000 $27,619 Inventory $52,500 $52,500 March $36,853 $0 $52,500 April $226,957 SO $52,500 May June July August September $32,727 $0 $1,001,818 $0 $357,391 $0 $509,091 $0 $1,474,783 SO $52,500 $52,500 $52,500 $52,500 $52,500 October November December Totals $0 $298,182 So $1,953,928 $116,364 $0 $740,000 $3,867,856 $52,500 $52,500 $52,500 $630,000 Total Cost $6,451,784