Quarter Forecast
1 190
2 560
3 540
4 440
Hiring Cost $100 per worker
Firing Cost $175 per worker
Regular Production Cost $ 10 per unit
Overtime Production Cost $ 15 per unit
Inventory Carrying Cost $ 3 per unit
Production Per Employee 20 units/qtr
Beginning Work Force 20 workers
ABC Company is in the process of developing a production plan for the next four quarters. The company is considering two plans that are detailed below. There are currently 30 units in inventory. Using the data in Table 9.7,
a) Prepare a production plan using level production, inventory, and overtime when necessary. Calculate the total cost of the production plan.
b) Prepare a production plan using chase demand strategy and calculate the total cost.
Note: beginning inventory of 30 units