The Cut Rite Company is a major producer of industrial lawn mowers. The cost to Cut Rite for hiring a semiskilled worker for its assembly plant is $3,000 and the cost for laying off one is $2,000. The plant averages an output of 36,000 mowers per quarter with its current workforce of 720 employees, Regular-time capacity is directly proportional to the number of employees. Overtime is limited to a maximum of 3,000 mowers per quarter and subcontracting is limited to 1,000 mowers per quarter. The costs to produce one mower are $2430 on regular time (including materials), $2,700 on overtime, and $3,300 via subcontracting. Unused regular-time capacity costs $270 per mower. No additional cost is incurred for unused overtime or subcontractor capacity. The current level of inventory is 4,000 mowers, and management wants to end the year at that level. Customers do not tolerate backorders, and holding a mower in inventory per quarter costs $300. The demand for mowers this coming year is as follows:

Two workforce plans have been proposed, and management is uncertain as to which one to use. The following table shows the number of employees per quarter under each plan:

Overtime is limited to production of a total of 20000 pounds per quarter. In addition, subcontractors can be hired at $1,000 per thousand pounds hut only 30,000 pounds per quarter can be produced this way.
The current level of inventory is 40,000 pounds and management wants to end the year at that level. Holding 1,000 pounds of feed supplement in inventory per quarter costs $100. The latest annual forecast is shown in Table.
Forecast and Capacities

a. Which plan would you recommend to management? Explain, supporting your recommendation with an analysis using the transportation method of production planning.
b. If management used creative pricing to get customers to buy mowers in nontraditional time periods, the following demand schedule would result:

Which workforce plan would you recommendnow?

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Quarter Demand 10,000 41,000 77,000 44,000 Quarter Plan 1 Plan 2 720 780 920 720 860 860 860 860 Period Quarter 1 Quarter 2Quarter 3Quarter 4 Total Demand (pounds Capacities lpounds) Regular time Overtime 30.000400,000800,000470,0001,800,000 390,000400,000 460,000 380,000 ,630,000 80,000 30,000 20,00020,00020,00020,000 30,00030,00030,00030,000 Quarter Demand 20,000 54,000 54000 44.000