# A given firm has the following demand outlook for the next several months: Jan Feb Mar Apr May Jun F 1 answer below »

A given firm has the following demand outlook for the next several months:

Jan

Feb

Mar

Apr

May

Jun

Forecast

1800

1500

1100

900

1100

1600

# of Work Days

22

19

21

21

22

20

It takes one person 5 hours to make the product, and workdays are 8 hours. You can start with any workforce level for January at no cost. In other words, you may choose your own starting workforce. Workforce changes may only be made at the start of each month. Following additional cost information is available:

Materials:                                \$100.00/unit

Inventory holding cost:           \$1.50/units/month

Hiring and training cost:         \$200.00/worker

Layoff cost:                            \$250.00/worker

Regular labor cost:                  \$4.00/hour

Overtime labor cost:                \$6.00/hour

Undertime labor cost:             \$4.00/hour

Further, beginning inventory before January is 400 units. We also need to have additional 25% of monthly demand as safety stock every month. For each month, to the extent possible, you should aim to have Ac€A?at leastAc€?? safety stock as your ending inventory. So, for example, your safety stock for January would be 25% of 1800, which is 450, which means that your actual production requirements are Ac€A?demand – beginning inventory + safety stock = 1800-400+450 = 1850Ac€?? products for January.

A] Use the chase strategy to formulate the aggregate production plan. In other words, produce exact monthly production requirements using a regular eight-hour day by varying workforce size. After meeting the safety stock constraint, having undertime is preferable to holding inventory.

Thank you!