Describe the Differences Between Level, Chase, and Mixed Production Plans

question 10

Essay

Describe the differences between level, chase, and mixed production plans. Use the forecast in the table to show the differences by creating a plan of each type. There is no beginning inventory and regular production capacity is 350 units. Overtime costs $10 extra and is limited to 50 units per month. Subcontracting is limited to 100 units per month and costs $15 per unit. Back orders cost $40 per unit and there is a cost of $5 per month to hold a unit in inventory. There is room for only 100 units in inventory.
$$\begin{array} { | l | c | } \hline { \text { Month } } & \text { Forecast } \\\hline \text { Tanuary } & 250 \\\hline \text { February } & 300 \\\hline \text { March } & 500 \\\hline \text { April } & 350 \\\hline\end{array}$$

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Definitions:

Technology Change

The process by which new technologies are developed and introduced, resulting in changes to production processes, products, and industry standards.

Labor Employment

The engagement of workers in the workforce to perform tasks in exchange for wages or salaries.

Marginal Product

The additional output produced as a result of utilizing one more unit of a particular input.

Marginal Revenue

The additional income received from selling one more unit of a good or service.