Develop separate production plans for chase

Assignment Help Operation Management

Reference no: EM1383563

The forecast for monthly demand is given below. On average there are 22 production days in a month. It takes one worker three days to complete one unit. The current production work force level is 50 employees. The cost of hiring an employee is $500, and the cost of firing an employee is $450. Regular time pay per employee is $1,250 per month. The cost to hold an ending inventory for a month is $4 per unit. The current level of inventory is 800 units. As protection against unforeseeable demand fluctuations, the ending inventory for each month is planned at no less than but as close as to 800 units. Develop separate production plans for chase and level strategies. What is the cost over 12 periods for each plan? Which plan is better?

Planning period Monthly demand
1 372
2 414
3 395
4 381
5 418
6 359
7 386
8 398
9 409
10 417
11 421
12 425

Reference no: EM1383563

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