After looking over the level production plan, David Griffin, vice president of manufacturing, speaks up: "This looks OK, but you know what bugs me about it? The assumption that if a worker is available, that worker lus to be making gauge sets, even if we don't need any more. It might make sense in some cases to just have the worker not produce, rather than laying a worker off in one month and hiring someone else back the next." Do you agree? What are the holding costs associated with having an extra worker produce gauge sets for one month? How do these compare to the layoff and hiring costs? How might a strategy of keeping extra workers idle affect the estimated manufacturing costs for the gauge sets? (Hint: Labor costs have to be accounted for somewhere.)

Mary passes out the following information to all of the QUESTIONS attenders: 1. Develop a level production plan for Covolo Diving Gear. What are the advantages and disadvantages of this plan? Could Covolo implement a pure chase plan, given the current capacity? Why? If sales continue to grow, what are the implications for production capacity at Covolo? 2. Patricia Rodriguez, vice president of marketing, states, "I've got to tell you all that I'm pretty comfortable with the forecasts for September through November, but after that, a lot could change. It's just very hard to forecast for four or more months out in this kind of market. "How will a monthly SorOP update with rolling planning horizons help alleviate Patricia's concerns? Are there still advantages to S\&OP, even though the forecasts imay change? 3. After looking over the level production plan, David Griffin, vice president of manufacturing speaks upe" This looks OK, but you know what bugs me about it? The assumption that if a worker is available, that worker hes Manufacturing cost per gauge set: $74.50 to be making gauge sts, even if we don't necd aay more. Holding cost: $8 per gauge set per month It might make sense in some cases to just have the worker Average labor hours required per gauge set: itor produce, rather than laying a worker off in one 0.25 hours month and hiring someone else back the next." Do you Lahor hours available per employee per month: I60 agree? What are the holding costs associated with having Plant capacity: 35,000 gauge sets pet month an extra worker produce gauge sets for one nonth? How Cost to hire and train a new employer: 51250 do these compare to the layoff and hiring costs? How Cost to lay off an employee: 5500 inight a strategy of keeping extra workers idle affect the Beginning and ending workforce is 50 estimated manufacturing costs for the gauge sets? (Hint: Heginning imventory is 10,000 Labor costs have to be accounted for somewhere.)