Instructions:

Suppose you have been given responsibility for developing the six$-$month aggregate production plan at Fizzy Galore, a manufacturer of soft drinks. Your company makes three types of soft drinks: regular, diet, and super$-$caffeinated. Fortunately, all three types are made using the same production process, and the costs related to switching between the three types are so minimal that they can be ignored. Thus, you can treat your problem as an aggregate planning exercise where the planning unit is cases of soft drinks, regardless of what types of drinks they are.

The S&OP team has developed a forecast of demand for the first six months of the year $($provided$).$ Cost data is also provided below. The material cost of a case of soda is the same regardless of whether it is produced in regular time or overtime. Also assume Fizzy Galore always plans to hold $5000$ cases of safety stock to meet unanticipated demand. January beginning inventory on hand is safety stock.

Current Workforce $8$ workers

Average monthly worker output $4000$ cases per month

Inventory holding cost $$0\mathrm{.}30$ per case per month

Stockout cost $$0\mathrm{.}75$ per case

Regular wage rate $$20\mathrm{.}00$ per hour

Regular production hours $/$ month $160$ hours

Overtime wage rate $$30\mathrm{.}00$ per hour

Hiring cost $$1000$ per worker

Subcontracting cost $$1\mathrm{.}15$ per case

Layoff cost $$1500$ per worker

Beginning inventory $($safety stock$)5000$

You have been asked to evaluate the cost of a level plan and a chase plan in order to make a recommendation