Aunt Dot’s located in New Orleans, LA, produces the popular Brunswick Stew during the fall and winter months, but it is marginal in the spring and summer. Use the following demand forecasts and costs to determine which of the following production planning strategies is best for Aunt Dot’s:
(a) Level production over the twelve months to meet average demand per month.
(b) Produce to meet demand each month. Absorb variations in demand by changing the size of the work force.
Month Demand Forecast
Use the following information to develop aggregate plans
??Overtime capacity per month up to regular production amount
??Subcontracting capacity per month unlimited
??Regular production cost $ 30 per container
??Overtime production cost $ 40 per container
??Subcontracting cost $ 50 per container
??Holding cost $ 2 per container per month
??No beginning inventory
??Beginning work force 10 workers
??Production rate 200 containers per worker per month
??Hiring cost $ 5,000 per worker
??Firing cost $ 8,000 per worker.