Explain which strategy is the best

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Reference no: EM131854972

Question: A company manufacturer needs help planning production for next year. Demand for its main product is expected to be,

Month	Demand Forecast	Month	Demand Forecast	Month	Demand Forecast	Month	Demand Forecast
Jan	1000	Apr	2000	Jul	5000	Oct	500
Feb	500	May	3000	Aug	3000	Nov	500
Mar	500	Jun	4000	Sep.	1000	Dec	3000

Given the following costs and demand forecast, test two strategies for meeting demand: (1) chase strategy with overtime or (2) 3000 units' level production from April through September, subcontracting production during the other months to meet demands. Explain which strategy is the best.

Costs and Other Information
Beginning workforce	8 workers	Holding cost	$0.5 per unit/month
Subcontracting capacity	Unlimited	Backordering cost	$10 per unit/month
Production rate per worker	250 units/month	Subcontracting Cost	$30 per unit
Regular wage rate	$15/hour	Overtime wage rate	$30/hour

Reference no: EM131854972

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