Consider the following:
a. Given the following costs and quarterly sales forecasts, use a pure level strategy to design a production plan that will meet demand. What is the cost of the plan?

b. The company owner has decided to implement a chase production strategy. Assume the costs of hiring and firing are $200 and $500, respectively. Compare the pure chase strategy with the pure level strategy given in part a. Which production plan more economically meets demand?

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Quarter Sales Forecast 50,000 150,000 200,000 Inventory carrying cost Production per employee Regular workforce Overtime capacity Subcontracting capacity Cost of regular production Cost of overtime production Cost of subcontracting Hiring costs $3.00 per/unit per quarter 1,000 units per quarter 50 workers 50,000 units 40,000 units $200