Solution-Determine the cost of each strategy

Determine the cost of each strategy

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Reference no: EM13896695

Rowley Apparel, manufacturer of the famous "Race-A-Rama" swimwear line, needs help planning production for next year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and demand forecasts, test these four strategies for meeting demand: (a) level production with overtime and subcontracting, as needed, (b) level production with backorders as needed, (c) chase demand, and (d) 3000 units regular production from April through September and as much regular, overtime, and subcontracting production in the other months as needed to meet annual demand. Determine the cost of each strategy. Which strategy would you recommend?

Month	Demand Forecast
January	1000
February	500
March	500
April	2000
May	3000
June	4000
July	5000
August	3000
September	1000
October	500
November	500
December	3000

Beginning workforce	8 workers
Subcontracting capacity	unlimited
Overtime capacity	2000 units/month
Production rate per worker	250 units/month
Regular wage rate	$15 per unit
Overtime wage rate	$25 per unit
Subcontracting cost	$30 per unit
Hiring cost	$100 per worker
Firing cost	$200 per worker
Holding cost	$0.50 per unit/month
Backordering cost	$10 per unit/month

Reference no: EM13896695

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Determine the cost of each strategy

Reference no: EM13896695

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