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 pure level plan:
A)Has lower inventory carrying cost than the hybrid plan.
B)Has higher hiring/layoff cost than the chase plan.
C)Has higher hiring/layoff cost than the hybrid plan.
D)None of these.

Question

Quizplus · Accepted Answer

Since hybrid plans combine aspects of level and chase, level plans generally have higher inventory cost than hybrid and lower hiring/firing cost than hybrid. Chase using hiring and firing has much higher hiring/firing cost than level

John Jones, Senior VP for Zanda Corp