A level strategy based on the following information

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Reference no: EM131095047

Develop a Chase Strategy and a Level Strategy based on the following information. The Level Strategy requires the use of a constant workforce equal to the minimum expected demand: subcontracting has to be used for additional capacity.


jun

Jul

aug

sep

Beginning inventory

400

250

200

150

Demand forecast

1700

1200

800

800

Number of working days by month

22

22

20

21

Costs

Materials $350.00 $ per unit
Inventory holding cost $3.50 $ per unit per month
Marginal cost of stockout $25.00$ per unit per month

Marginal cost of subcontracting $50.00

Hiring and training cost $2500.00 $ per worker

Layoff cost $4500.00 $ per worker

Labor hours required per unit 3.0 per unit

Straight-line cost (first eight hours each day) $15.00 $ per hour

Overtime cost $25.00 $ per hour

Reference no: EM131095047

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