Question 2. Aggregate plan for home-networking products (5 marks) John, the operations manager of Netgear Inc., is developing an aggregate plan of the home- networking products for the coming six months. He has obtained a demand forecasts for the planning horizon as shown below. The department now has 72 full-time workers, each of whom can produce 16 units per day. They work for eight hours per day and the labour cost is $15 per hour. The material cost is $30 per unit and the inventory cost is $5 per unit per month. The subcontract cost is $45 per unit (including the material cost) and stockout cost is $300 per unit. John is considering a plan that would fire TWO workers before start working in January and then keep the same workforce level, for any excessive demand, he will subcontract. The hiring and firing cost for each worker is $30000 and $15000 respectively. Determine the total cost of this plan. (4 marks) Month Demand Working days Jan 24000 22 Feb 25600 19 Mar 27200 21 Apr 28800 21 May 22400 22 Jun 28800 20 Total 156800 I If John is allowed to use Overtime to produce the excessive demand with overtime labor cost of $25/hour for each worker, would you choose overtime instead of subcontract? Why? (1 mark)