Buffalo Bill's prepares its $6-$month aggregate plan by forecasting

demand for $50-$LB bags of cattle feed as follows: January, $1,350$ bags;

February $1,500$; March $1,650$; April $1,550$; May $2,100$; and June

$1,500.$ The feed mill plans to begin the new year with $100$ bags of

beginning inventory left over from the previous month, and

backorders are permitted at a cost of $$4\mathrm{.}75$ per bag. Overtime

capacity is set at $150$ bags per month until April, at which time it will

increase to $350$ bags per month $($May & June$).$ A friendly competitor in

Grand Forks, ND is also available as a backup source $($subcontractor$)$ to

meet demand but can provide only $300$ bags per month during the $6-$

month period. Cost on regular time per bag is $$13\mathrm{.}25$; Overtime cost

is $$6\mathrm{.}25$ extra; subcontracting cost $$22\mathrm{.}50.$ Carrying cost is $3\mathrm{.}50$ per

bag. Previous quarter's output was $900$ bags. If Longhorn decides to

hire or layoff, the costs would be $$27\mathrm{.}00$ & $$41\mathrm{.}00$ per bag

respectively.

a$.$ Utilizing a Chase strategy $($vary the workforce$),$ based on the

current period, what is the total cost of the plan?

Was there a need to hire, if so how

many units and what was the cost?

b$.$ Utilizing a mixed strategy with a level production rate of $1,400$

units, then utilizing overtime, if needed $($refer to the capacity limits$).$

What is the cost of this plan?

What

there a need to backorder

c$.$ Utilize a mixed strategy at the minimum period demand forecast

over the $6-$month period, then utilize the subcontractor, if needed.

What is the cost of this plan?

How

much cost was contributed to utilizing subcontracting?

d$.$ Based on evaluating the $3$ planning options, which choice should be

made?