Question: 1. Develop a Chase strategy in which all production occurs in the US. April June July January 1000 February March 1100 1300 May 1500 August

1. Develop a Chase strategy in which all production occurs in the US.

April June July January 1000 February March 1100 1300 May 1500 August 2500 2400 September October November December 2000 1600 1200 800 Demand 1800 2200 1500 1500 Production decision (1000 board ft) Regular 1000 Overtime Local - US Total 1000 800 1100 0 1500 0 1300 0 1500 0 0 1200 0 1500 0 1000 2500 1500 0 900 2400 0 700 COST PARAMETERS Production cost in Chile - Regulart Production cost in Chile - Overtime Production cost in the US Transportation cost (from Chile) Hiring/training cost in Chile Layoff cost in Chile Holding cost Shipping cost 1500 0 100 1600 $150 per 1000 board feet $200 per 1000 board feet $400 per 1000 board feet $50 per 1000 board feet $1,000 per new employee $500 per employee $25 per 1000 board feet $50 per 1000 board feet 300 0 500 2000 1100 1300 2200 1200 800 Ending Inventory 0 0 0 0 0 0 0 0 0 0 0 0 Chile Capacity decision (1000 board ft) Existing Employees 20 Hire 0 Layoff 0 Net Employees 20 Regular capacity 1000 Overtime capacity 250 20 2 0 22 1100 275 22 4 0 26 1300 325 26 4 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 6 24 1200 300 24 0 8 16 800 200 CAPACITY PARAMETERS Maximum shipping capacity Lead time Production rate in Chile Labor capacity - Regular time # of employees in Chile Maximum inventory capacity Overtime capacity Backorder Demand has to be met 1500 1000 board feet per month 1 month 50 1000 board feet per employee per month 160 hours per month per employee 20 3000 1000 board feet per month 25% of the regular hours not allowed $225,000 $225,000 $225,000 $120,000 $0 $0 Costs Regular production Overtime production Shipping cost Local - US production Inventory Hiring/Layoff Total Costs $150,000 $0 $50,000 $0 $165,000 $0 $55,000 $0 $0 $2,000 $222,000 $180,000 $0 $60,000 $195,000 $0 $65,000 $0 $0 $4,000 $264,000 $225,000 $0 $75,000 $0 $0 $4,000 $304,000 $225,000 $0 $75,000 $360,000 $225,000 $0 $75,000 $40,000 $75,000 $280,000 $75,000 $400,000 $75,000 $200,000 $40,000 $0 $0 $75,000 000 $120,000 $0 $0 $420,000 $0 $0 $200,000 $0 $3,000 $243,000 $4,000 $164,000 $580,000 $700,000 $660,000 $500,000 $340,000 $4,597,000 OVERALL COST OF THE CHASE STRATEGY April June July January 1000 February March 1100 1300 May 1500 August 2500 2400 September October November December 2000 1600 1200 800 Demand 1800 2200 1500 1500 Production decision (1000 board ft) Regular 1000 Overtime Local - US Total 1000 800 1100 0 1500 0 1300 0 1500 0 0 1200 0 1500 0 1000 2500 1500 0 900 2400 0 700 COST PARAMETERS Production cost in Chile - Regulart Production cost in Chile - Overtime Production cost in the US Transportation cost (from Chile) Hiring/training cost in Chile Layoff cost in Chile Holding cost Shipping cost 1500 0 100 1600 $150 per 1000 board feet $200 per 1000 board feet $400 per 1000 board feet $50 per 1000 board feet $1,000 per new employee $500 per employee $25 per 1000 board feet $50 per 1000 board feet 300 0 500 2000 1100 1300 2200 1200 800 Ending Inventory 0 0 0 0 0 0 0 0 0 0 0 0 Chile Capacity decision (1000 board ft) Existing Employees 20 Hire 0 Layoff 0 Net Employees 20 Regular capacity 1000 Overtime capacity 250 20 2 0 22 1100 275 22 4 0 26 1300 325 26 4 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 0 30 1500 375 30 0 6 24 1200 300 24 0 8 16 800 200 CAPACITY PARAMETERS Maximum shipping capacity Lead time Production rate in Chile Labor capacity - Regular time # of employees in Chile Maximum inventory capacity Overtime capacity Backorder Demand has to be met 1500 1000 board feet per month 1 month 50 1000 board feet per employee per month 160 hours per month per employee 20 3000 1000 board feet per month 25% of the regular hours not allowed $225,000 $225,000 $225,000 $120,000 $0 $0 Costs Regular production Overtime production Shipping cost Local - US production Inventory Hiring/Layoff Total Costs $150,000 $0 $50,000 $0 $165,000 $0 $55,000 $0 $0 $2,000 $222,000 $180,000 $0 $60,000 $195,000 $0 $65,000 $0 $0 $4,000 $264,000 $225,000 $0 $75,000 $0 $0 $4,000 $304,000 $225,000 $0 $75,000 $360,000 $225,000 $0 $75,000 $40,000 $75,000 $280,000 $75,000 $400,000 $75,000 $200,000 $40,000 $0 $0 $75,000 000 $120,000 $0 $0 $420,000 $0 $0 $200,000 $0 $3,000 $243,000 $4,000 $164,000 $580,000 $700,000 $660,000 $500,000 $340,000 $4,597,000 OVERALL COST OF THE CHASE STRATEGY

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