Based on the following information, which of the following aggregates plans is more economical?
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Based on the following information, ¿which of the following aggregates plans is more economical?Plan 1: Keep a workforce equal to the smallest month requirement, supplementing with overtime requirements.Plan 2: Implement a “Chase strategy”. Jan Feb Mar Apr May JunDemand Forecast 1950 1650 1700 1850 1550 1850Working days 21 19 21 20 21 22
Safety Stock=10% of the Demand ForecastCosts:Materials $35.00/unitInventory holding cost $1.75 unit/monthMarginal cost of stockout: $6.00Hiring Costs: $350.00/employeeLayoff Costs: $650.00/employeeRequired hours per unit: 1.25/hoursStraight-line cost (first eight hours): $15.00/hourOvertime cost: $35.00/hourInitial Inventory: 500 Units
Plan 1: Keep a workforce equal to the smallest month requirement, supplementing with overtimerequirements.It is the month of May.JanDemand Forecast 1950Working days21 Feb165019 Mar170021…
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