A B C D E F G H 5 3 M N O Q R W 0 Cool Air Inc., a fictitious manufacturer of air condiditoners, has estimated the demand for its air conditioners for the upcoming year in the following table. $180 $15 25 2 $20 a. Use a level production strategy if Cool Air has 25 full-time employees whose regular time production rate is two air conditioners per day and costs of $180 per unit. Use inventory and backorders to absorb variations in demand. Inventory carrying cost is $15 per unit per month and backorder cost is $20 per unit per month. January February March April May June July August September October November December Total 700 850 12001 1250 1350 1450 1100 1000 720 600 22 20 23 22 24 22 23 17 21 22 20 20 900 880) 12000 1 a: Level Production Strategy 2 3 Beginning Inventory 4 Reg. time production cost/unit 5 Average inventory holding cost/unit/month 6 Workforce Size 7 Production Rate/employee/day 8 Backorder Cost in $/unit/month 9 10 11 Forecast 12 # of working days 13 Production 14 Beginning Inventory 15 Ending Inventory 16 Average Inventory 17 Production and Inventory Costs 18 Reg. time production cost in $ 19 Inventory holding cost in $ 20 Backorder Cost in $ 21 Total cost In $ 22 23 24 25 26 27 b. Use a chase production strategy. Hiring and tranining an employee costs per $400. The per-employee layoff cost is $300. Current workforce size is 25 full-time employees. c. Use a mixed production strategy with a constant force of 20 employees per months. Use inventory, overtime, and subcontracting to absorb demand variations. Regular time produciton cost is $200 per unit. Overtime is limited to 30% of regular time production and costs $300 per unit. Subcontracting is also limited to 500 units per month and costs $350 per unit. Inventory carrying cost is $10 per unit per month. Ignore employee idle time. d. Which plan has the minimum total cost (in U.S. dollars)? 28 29 30 31 32 33