Tampa’s Soda Pop, Inc. has a new fruit drink for which it has high hopes. Don Hammond, the production planner, has assembled the following data and demand forecast:

Quarter	Forecast
1 2 3 4	1,800 900 1,600 1,100

Previous quarter’s output = 1,100 cases

Beginning Inventory = 160 cases

Backorder cost = $35 per case at the end of the quarter

Inventory holding cost = $30 per case at the end of quarter

Hiring employees = $30 per case

Firing employees = $40 per case

Subcontracting cost = $80 per case

Unit cost on regular time = $20 per case

Overtime cost = $15 extra per case

Capacity on regular time = 1,800 cases per quarter

Capacity on overtime = 200 cases per quarter

Develop an aggregate plan using the three following options:

a) Plan A: Chase strategy that hires and fires personnel as necessary to meet the forecast.

b) Plan B: Level strategy. (Overtime not allowed)

c) Plan C: Level strategy that produces 1,100 units per quarter and meets the forecasted demand with overtime, subcontracting and inventory building (backorder is not allowed).

d) If you are the production manager, which plan do you implement and why?

Answer rating: 100% (QA)

CHASE STRATEGY The chase strategy here shows that there is a lot of matching of the demand and capacity period for a period It could lead to a reasonable hiring and lay off of workmen Insecurity and l... View the full answer