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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
Number of working days by month
22
20
21
Costs
Materials $350.00 $ per unitInventory holding cost $3.50 $ per unit per monthMarginal 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
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