Fred's Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters....

Fred's Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.

Quarter	Demand	Previous quarter's output	800 units
1	700	Beginning inventory	0 units
2	900	Stockout cost	$100 per unit
3	1200	Inventory holding cost	$10 per unit at end of quarter
4	600	Hiring workers	$20 per unit
		Laying off workers	$40 per unit
		Subcontracting cost	$200 per unit
		Unit cost	$100 per unit

Which of the following production plans is better: Plan A–chase demand by hiring and layoffs; Plan B–pure level strategy, or Plan C–700 level with the remainder by subcontracting (Show your explanation and calculation to earn full credit)?

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keosha answered 1 year ago

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