10. Castergourd Home Products makes two types of butcherblock tables: the Beefeater and the Deutschlander. The two tables are made in the same facility and use the same amount of labor and equipment. In addition, we know the following:

■ Each table costs $300 to make, and each requires, on average, 3.2 hours of labor.

■ Each employee works 160 hours per month, and there is no effective limit on the number of employees.

■ The cost of hiring or laying off an employee is $300.

■ The monthly holding cost for a table is $15.

■ For planning purposes, Castergourd will begin and end with 20 employees and 0 tables in inventory.

a. (***) Develop a top-down level production plan for Castergourd for the 10-month planning period.
Calculate the total production, hiring, layoff, and inventory costs for your plan.

b. (***) Repeat Part

a, except in this case develop a chase production plan.

c. (**) Suppose hiring and layoff costs increase dramatically.
In general, will this make a level plan look better or worse relative to a chase plan? Explain.

Transcribed Image Text:

Forecasted sales for the tables are as follows: MONTH BEEFEATER DEUTSCHLANDER November 2005 650 3048 December 676 2899 January 2006 624 3198 February 624 2671 March 696 2919 April 475 3102 May 566 2964 June 819 2409 July 754 3381 August 982 3965