Wes and Steve are partners in a lunch truck company that operates a central kitchen and operates lunch trucks that travel to various locations in Philadelphia, Monday-Friday. The lunch trucks deliver pre-packaged healthy sandwich and salad alternatives, fresh fruit and pre-packaged low-fat desserts and canned beverages. Together, the partners have to make many decisions about how to structure the operational aspects of the business so that it is cost effective, efficient and profitable. Current Situation: Wes and Steve have begun to sell their bottled hot sauce to area markets. They have prepared a forecast of expected demand for the bottles for the next 6 periods as shown below. Given this information and the data re: capacities and costs, complete the 2 required aggregate plans on the next pages and answer the Qs shown. Period 1 2 3 4 5 6 Forecast 400 500 300 650 500 350 Maximum regular production = 350 units/period Maximum overtime = 50 units/period Maximum Subcontracting = 500/period Beginning inventory = 0 Ending inventory (in period 6) = 0 Regular time cost = $10 Overtime cost = $15 Sub-contract cost = $25 Inventory holding costs are $2/average unit/period Backorders cost of $20/unit/period Important Notes: You must write neatly and NOT in red ink. You are not permitted to cross out answers; use white-out or start over. If I cannot read your work, you will receive zero points. Round to 2 decimal points if necessary. CARRY THROUGH ERRORS COUNT and points will be deducted! Double check your work. LEVEL PLAN (10 pts) Periods 1 2 3 4 5 6 TOTAL 400 500 300 650 500 350 Forecast Output Output Forecast Inventory Regular Overtime Subcontract Beginning Ending Average Backlog Costs: Output: Inventory Back orders Total Regular Overtime Subcontract CHASE PLAN (10 pts) Period Forecast Output Regular Overtime Subcontract Output Forecast Inventory Beginning Ending Average Backlog Costs: Output: Regular Overtime Subcontract Inventory Back orders Total 1 2 3 4 5 6 TOTAL 400 500 300 650 500 350 1. Which plan is better from a cost standpoint? 2. Which plan is better for employee work/life balance? Why? 3. For each plan, how would service/quality be jeopardized (be very brief with your response)? (2 pts) (1 pt) (1 pt) Level: Chase: 4. If demand was to increase over time, what STRATEGIC ACTION must Wes and Steve undertake regarding capacity (not demand) to ensure profitability, cost effectiveness and customer satisfaction/quality for the business? (FYI - be specific when explaining HOW; there is only one correct answer to this Q. You must be brief with your answer: 1 sentence max.) NOTE: This answer has nothing to do with the type of plan they should use. It's a separate strategic action. (1 pt)