Chase demand by hiring and layoffs

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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 Regular production cost $80 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)?

Reference no: EM132266759

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