SummerFun, Inc., produces a variety of recreation and leisure products. The production manager has developed an aggregate forecast: Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost?

a. Use regular production. Supplement using inventory, overtime, and subcontracting as needed. No backlogs allowed.
b. Use a level strategy. Use a combination of backlogs, subcontracting, and inventory to handle variations indemand.

Month Mar Apr May Jun Jul Aug Sep Total Forecast 50 60 50 40 51 350 Use the following information to develop aggregate plans. Regular production cost Overtime production cost $120 per unit Regular capacity Overtime capacity Subcontracting cost Subcontracting capacity 2 units per month Holding cost $80 per unit Back-order cost Beginning inventory $20 per unit 0 units 40 units per month 8 units per month S140 per unit S10 per unit per month