We "R" Toys sells Game Girls for $50 apiece. At the end of June, the company has an inventory of 50,000 Game Girls. Capacity of the production facility is set purely by the number of workers assembling the Game Girls. At the end of June, the company has a workforce of 300 employees, each of whom works 8 hours of regular time at $15/hour for 20 days each month. Work rules require that no employee work more than 40 hours of overtime per month. The various costs are shown in Table 9-8. | Sandra is the head of operations at Mintendo, the manufacturer of Mintendo Game Girl toy and Bill is the head of sales at We "R" Toys, a retailer of Mintendo Game Girl toy. The two have come up with a joint forecast for the toy and are deciding when to offer a promotion on the toy. Sandra wants to offer the promotion in September while Bill wants to offer it in the month of November. Your job is to assist Sandra and Bill to decide on the timing of the promotion. There are three promotion plans to be analyzed. Promotion plan 1, lowers the price of the toy by $5; promotion plan 2, calls for a $10 reduction on the price of the toy and promotion plan 3, deals with offering a $5 discount while raising the cost of subcontracting from $18 per unit to $22 per unit. TABLE 9-8 Costs for Mintendo/We "R" Toys Item Material cost TABLE 9-7 Demand for Game Girls Month Cost Demand Forecast $12/unit July 100,000 Inventory holding cost $2/unit/month August 110,000 Marginal cost of a stockout $10/unit/month September 130,000 October Hiring and training costs $3,000/worker 180,000 November 250,000 $5,000/worker December 300,000 0.25/unit Regular-time cost $15/hour Overtime cost $22.50/hour Cost of subcontracting $18/unit Layoff cost Labor hours required Questions 1. Which option delivers the maximum profit for the supply chain: Sandra's plan, Bill's plan, or no promotion plan at all? Assume starting and ending inventory of 0. 2. How does the answer change if a discount of $10 must be given to reach the same level of impact that the $5 discount received? 3. Suppose Sandra's fears about increasing outsourcing costs come to fruition and the cost rises to $22/unit for subcon- tracting. Does this change the decision when the discount is $5?