Henry, the operating manager, is attempting to put together an aggregate plan for the coming six months. He has obtained a forecast of expected demand for the planning horizon as below. The department now has 55 full-time workers, each of whom can produce 2 units of output per day. They work for eight hours per day and the labour cost is $5 per hour. The material cost is $100 per unit and the inventory cost is $1.5 per unit per period. The subcontract cost is $160 per unit and backlog cost is $399 per unit per period. The hiring and firing cost for each employee is $150 and $189 respectively. Determine the total cost of the plan.

Period	0	1	2	3	4	5	6	Total
Demand		2900	3600	1500	2600	2200	3200
Working days		22	19	21	21	22	20
Employees	55

What is Economies of Scales?