A company is introducing crochet and hand knit kitchen towels in the Canadian market on 1^st of April 2022. Companies like William Sonoma, and Bed, Bath and Beyond dominate this market. However, these companies mostly sell cloth kitchen towels, and target an older demographic. With the growing demand for crochet and hand knit towels, the company estimates that they can sell 1.8 million of these towels in 2022. The promotional price is set at $8 per towel. The inventory carrying cost is 20% of the yearly average inventory value. The industry growth is expected to be 7% year over year. Your group have been hired as consultants to answer the following questions:

1. The company also wants you to recommend an aggregate planning strategy. They have provided you with the following information.

Month	Expected Demand	Production Days
April 2022	150000	21
May 2022	170000	22
June 2022	160000	21
July 2022	150000	22
August 2022	140000	22

- Workers pay per hour - $10.00

- Number of labour hour required to produce 1 towel - 15 minutes

- Number of hours in a shift - 8 hours

- The company operates two shifts

- The inventory carrying cost is 20% of the unit price.

- The cost of increasing daily production rate (hiring and training) is $ 0.5 per unit

- The cost of decreasing daily production rate (layoffs) is $1 per unit

- Cost of subcontracting = $ 4 per unit

Based on these data, what aggregate planning strategy should the company pursue.

Answer rating: 100% (QA)

Answer Explanation Unit price 8 Inventory carrying cost per year 820 1... View the full answer