Demand for the clothing follows seasonal pattern

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Reference no: EM131727070

A manufacturer of men’s wear needs help planning production for coming year. Demand for the clothing follows a seasonal pattern as shown in Table 2 below. Given the following costs and demand forecasts test these four strategies for meeting forecast demand: (a) level production with overtime and subcontracting, (b) level production with backorders as needed, (c) chase demand and (d) 3000 units in regular production from April through September and as much overtime, and subcontracting production in the other months as needed to meet annual demand. Determine the cost of each strategy. Which strategy would you recommend? Table 2: Monthly demand forecasts Month Demand forecast January 1000 February 500 March 500 April 2000 May 3000 June 4000 July 5000 August 3000 September 1000 October 500 November 500 December 3000 Beginning workforce 8 workers Subcontracting capacity unlimited Overtime capacity 2000 units per month Production rate per worker 250 units/month Regular wage rate $ 15 per unit Overtime wage rate $ 25 per unit Subcontracting cost $ 30 per unit Hiring cost $ 100 per worker Firing cost $ 200 per worker Inventory holding cost $ 0.50 per unit/month Backordering cost $10 per unit/month.

Reference no: EM131727070

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