Develop chase strategy and level strategy

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Reference no: EM131133551

Develop a Chase Strategy and a Level Strategy for JXA, based on the following information. The Level Strategy requires that JXA uses a constant workforce equal to the minimum expected demand and subcontracting to meet additional requirements. (Each unit requires 2 hours of production.)

Jun Jul Aug Sep Oct Nov

Beginning Inventory 1500 250 2000 1500 1200 1350

Demand Forecast 1700 1200 1200 800 1800 1600

Number of Working Days by Month 22 22 20 21 20 22

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 $ per unit ($120 less $100 material cost)

Hiring and training cost $2000.00 $ per worker

Layoff cost $3500.00 $ per worker

Labor hours required per unit 2.00 $ per unit

Straight-line cost (first eight hours each day) $12.00 $ per hour

Overtime cost $20.00 $ per hour

Reference no: EM131133551

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