Page Heating Inc. constructs air conditioning and heating systems for hospitals. The expected demand and production days for the next 6 months are as follows.

month	Expected demand	Production days	Demand/ day
jan	1000	20	50
feb	1000	20	50
mar	700	20	35
apr	600	20	30
may	800	20	40
jun	900	20	45

Cost and other required information for the company is given in the following Table.

Inventory carrying cost	$ 5 per unit per month
Subcontracting cost per unit	$30 per unit
Average pay rate	$10 per hour ($80 per day)
Overtime pay rate	$15 per hour (above 8 hours per day)
Labor-hours to produce a unit	4 hours per unit
Cost of increasing daily production rate (hiring and training)	$300 per unit per month
Cost of decreasing daily production rate (layoffs)	$600 per unit per month

Develop an aggregate production plan matching the workforce to the production requirement (i.e. a chase strategy) and compute the total cost of this plan. Assume that the firm starts with zero inventory and exact number of workers required for January production. Every worker works for 8 hours per day in regular time.

Write "0" (zero) if no ending inventory or hiring/firing exists for that month.

Write the big numbers without commas, e.g. 2300.

Months	Demand	Daily production rate	Monthly production	Hiring (increase in daily prod rate)	Firing (decrease in daily prod rate)
Jan	1000	Answer	Answer	0	0
Feb	1000	Answer	Answer	Answer	Answer
Mar	700	Answer	Answer	Answer	Answer
Apr	600	Answer	Answer	Answer	Answer
May	800	Answer	Answer	Answer	Answer
Jun	900	Answer	Answer	Answer	0

Total cost = regular labor cost + hiring cost + firing cost

= 20 days*$10/hr*4hrs/unit* Answer + $300/unit*Answer + $600/unit* Answer = $ Answer

Does subcontracting increase or decrease costs? AnswerIncreaseDecrease