John Jones, senior VP for Zanda Corp., is looking at three alternative aggregate production plans for the next six-month period. At his company, demand varies by month with substantial month-to-month differences. The three alternatives are a "pure level plan," which keeps an absolutely constant workforce, a "pure chase plan" relying on hiring and layoffs, and a hybrid plan. He is most likely to find that the hybrid plan:
A)Has lower inventory carrying cost than the level plan and lower hiring/layoff cost than the chase plan.
B)Has higher hiring/layoff cost than the chase plan and higher inventory carrying cost than the level plan.
C)Has lower inventory carrying cost than the chase plan and higher hiring/layoff cost than the level plan.
D)None of these.

Question

Quizplus · Accepted Answer

Since hybrid plans combine aspects of level and chase, they typically have less inventory than level, but more than chase. They also typically have more hiring/layoff than level, but less than chase.

John Jones, Senior VP for Zanda Corp