Osprey Fabrication Has the Following Aggregate Demand Requirements and Other

question 89

Essay

Osprey Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.
$\begin{array}{|l|l|l|l|}\hline\text { Quarter}&\text { Demand }& \text { Previous quarter's output } &1300 \text { units }\\\hline1&1400& \text { Beginning inventory } & 0\text { units } \\\hline2&1200& \text { Stockout cost } & \$ 50 \text { per unit } \\\hline&&&\$ 10 \text { per unit at end of } \\3&1600& \text { Inventory holding cost } &\text { quarter }\\\hline 4&1500&\text { Hiring workers } & \$ 4 0\text { per unit } \\\hline &&\text { Laying off workers } & \$ 80 \text { per unit } \\\hline &&\text { Subcontracting cost } &\$ 60 \text { per unit }\\\hline&& \text { Unit cost } & \$ 30 \text { per unit } \\\hline &&\text { Overtime } & \$ 15 \text { extra per unit }\\\hline\end{array}$

Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; Plan B-pure level strategy, or Plan C-1350 level with the remainder by subcontracting?

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