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In: Accounting

Develop a Chase Strategy and a Level Strategy based on the following information. • The Level...

Develop a Chase Strategy and a Level Strategy based on the following information.

• The Level Strategy requires the use of a constant workforce equal to the minimum requirement based on the expected demand (Note: Any needed capacity can be fulfilled with overtime.)

• Chase strategy should use ‘hiring and firing’ actions to balance the capacity.

Twenty-three workers worked during February. Illustrate and explain which is the best plan.

March

April

May

June

Beginning Inventory

600

300

250

200

Demand Forecast

1800

1200

1200

1800

Numbers of Working days by month

21

200

21

22

Costs

Materials

$90.00 per unit

Inventory holding cost

$8.50 per unit per month

Marginal cost of stockout

$25.00 per unit per month

Marginal cost of subcontracting

$60.00

Hiring and training cost

$4500.00 per worker

Layoff cost

$6000.00 per worker

Labor hours required per unit

3.0 per unit

Straight-line cost (first eight hours each day)

$12.00 per hour

Overtime cost

$24.00 per hour

Solutions

Expert Solution


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