Question

Beginning Workers			100
Beginning inventory =			2000
Productive hours/worker/day =			6.75
Units per worker per month			100

Level Strategy	Jan	Feb	Mar	Apr	May	June
Demand	15,200	14,250	7,000	10,300	13,650	17,000
Beginning Inv.
Net Requirements
Beginning Workers
Hired
Fired
Req. Workers
Production
Ending Inventory

Using a level strategy and the following data, what is the production level for each month?

A. 13,200

B. 14,000

C. 12,900

D. 12600

2. Using the level strategy what is the ending inventory for June?

A. 50

B, -200

C. 0

D. 200

Answer 1

1. A level strategy tries to produce an aggregate plan that maintains a steady production rate throughout the period. (For Jan to Jun)

Production per month required for level strategy = {(total forecasted demand for 6 months – initial inventory)/ time period}

= {(15,200 + 14,250 + 7,000 + 10,300 + 13,650 + 17,000) – 2000}/6

= {77,400 -2000}/6

= 75,400/6 = 12,566.67 units or 12,600 (rounding off to nearest 100th number as workers are producing in multiple of 100 per month and workers cannot be in fractional number)

Therefore correct answer is option: D. 12,600

2. Each worker can produce 100 units per month

Then forecasted workforce required per month = Production required per month for level strategy/ 100

= 12,600/100 = 126 workers per month            

Therefore table can be completed in following manner-

Month	Jan	Feb	Mar	Apr	May	Jun
Demand	15,200	14,250	7,000	10,300	13,650	17,000
Beginning Inv.	2,000	-600	-2,250	3,350	5,650	4,600
Net Requirements	13,200	14,850	9,250	6,950	8,000	12,400
Beginning Workers	100	126	126	126	126	126
Hired	26	0	0	0	0	0
Fired	0	0	0	0	0	0
Req. Workers	126	126	126	126	126	126
Production	12600	12600	12600	12600	12600	12600
Ending Inventory	-600	-2,250	3,350	5,650	4,600	200

Ending inventory for the month of June is 200 units

Therefore correct answer is option: D. 200

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