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Osprey Fabrication Has the Following Aggregate Demand Requirements and Other

Question 112

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Osprey Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.
 Quarter  Demand  Previous quarter’s output 1300 units 11400 Beginning inventory 0 units 21200 Stockout cost $50 per unit $10 per unit at end of 31600 Enventory holding cost  guarter 41500 Hiring workers $40 per unit  Laving off workers $80 per unit  Subcontractingcost $60 per unit  Unit cost $30 per unit  Overtine $15 extra per unit \begin{array}{|l|l|l|l|}\hline\text { Quarter } & \text { Demand } & \text { Previous quarter's output } & 1300 \text { units } \\\hline 1 & 1400 & \text { Beginning inventory } & 0 \text { units } \\\hline 2 & 1200 & \text { Stockout cost } & \$ 50 \text { per unit } \\\hline & & & \$ 10 \text { per unit at end of } \\3 & 1600 & \text { Enventory holding cost } & \text { guarter } \\\hline 4 & 1500 & \text { Hiring workers } & \$ 40 \text { per unit } \\\hline & & \text { Laving off workers } & \$ 80 \text { per unit } \\\hline & & \text { Subcontractingcost } & \$ 60 \text { per unit } \\\hline & & \text { Unit cost } & \$ 30 \text { per unit } \\\hline & &\text { Overtine } & \$ 15 \text { extra per unit }\\\hline\end{array} Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; Plan B-pure level strategy, or Plan C-1350 level with the remainder by subcontracting?

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Plan A will cost $215,000, Plan B will c...

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