Forecasted demand over the planning horizon

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Forecasted Demand over the planning horizon is as follows: Month 1 2 3 4 5 Demand 250 250 375 400 450 Regular production cost is $2 per unit. Regular production capacity is 300 units. Beyond 300 units, the company must subcontract, at a cost of $3 per unit. Carrying cost is $.50 per unit per period (use average inventory). a. Using a level production strategy, What is the total planning costs over the 5 periods? Finish the planning period with zero ending inventory. b. Using a chase strategy, what is the total planning costs over the 5 periods? Finish the planning period with zero ending inventory. c. Which strategy is the better plan? Explain how you know.

Reference no: EM131132153

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