Stan has a problem. He must prepare an aggregate production plan for his boss as soon as possible. However, he doesnt know the best way to use his workers or his machines. He has the following information: Cost to hire: $100 per worker Cost to layoff: $400 per worker Total Capacity: 14,000 units per quarter Inventory costs: $5 per unit per quarter Demand schedule: Q1 9,000 Q2 10,000 Q3 7,500 Q4 12,000

Stan cannot subcontract work or let orders go unfilled or pay overtime. He knows each worker can produce 25 units per quarter and workers must make whole units. He has 10 workers on staff right now and when hiring he cannot hire partial/fractional workers. Which of the following plans is the better option? Is it mixed because the total cost is lower than the other two strategies?

Level

Qtr	Demand	Production	Workers needed	Hire	Layoff	Ending Inventory
Q4			10			0
Q1	9,000	9,625	385	375	0	625
Q2	10,000	9,625	385	0	0	250
Q3	7,500	9,625	385	0	0	2,375
Q4	12,000	9,625	385	0	0	0
Totals				375	0	3250
Marginal costs				$100	$400	$5
Cost				$37,500	$0	$16,250
						$53,750

Chase

Qtr	Demand	Production	Workers needed	Hire	Layoff	Ending Inventory
Q4			10			0
Q1	9,000	9,000	360	350	0	0
Q2	10,000	10,000	400	40	0	0
Q3	7,500	7,500	300	0	100	0
Q4	12,000	12,000	480	180	0	0
Totals				570	100	0
Marginal costs				$100	$400	$5
Cost				$57,000	$40,000	$0
						$97,000

Mixed

Qtr	Demand	Workers needed	Production	Hire	Layoff	Ending Inventory
Q4		10				0
Q1	9,000	370	9,250	360	0	250
Q2	10,000	390	9,750	20	0	0
Q3	7,500	390	9,750	0	0	2,250
Q4	12,000	390	9,750	0	0	0
Totals				380	0	2500
Marginal costs				$100	$400	$5
Cost				$38,000	$0	$12,500
						$50,500