B u D E F. G H . - J K K L M N o Q R S T U V W x Y 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 2. $400 $300 25 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. April June December Total January February March 700 850 May 1200 July August September October November 1350 1450 1100 1000 880 720 900 1250 600 12000 22 20 23 22 24 22 23 17 21 22 20 20 256 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. A 1 b: Chase Production strategy 2 3 Beginning Inventory 4 Reg. time production cost/pair 5 Production rate/worker/day in units 6 Hiring cost/worker 7 Firing cost/worker 8 Current Workforce 9 10 11 Forecast 12 # of working days 13 Production 14 # of Workers Required 15 # of Workers Hired 16 # of Workers Fired 17 Production and Inventory Costs 18 Reg. time production cost in $ 19 Hiring cost in $ 20 Firing cost in $ 21 Total cost In $ 22 23 24 25 26 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 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)? 27 28 29