Togo makes riding lawn mowers and tractors. The company’s expected quarterly demand is given below in the chart. The company will have 300 mowers in inventory at the beginning of the month and desires to maintain at least that number at the end of each month. Below is other critical data:
Production cost per unit = $325
Inventory Carrying cost per quarter per unit = $50 (based on ending inventory)
Hiring Cost per worker = $350
Firing cost per worker = $700
Beginning # of workers = 40
Each worker can produce 150 units per quarter
Complete the tables and calculate the cost of the two plans
LEVEL Plan
Quarter Demand Regular Production Ending Inventory Workers Required Hire Fire
1 5000
2 9000
3 7000
4 9000
Total 30,000
CHASE PLAN
Quarter Demand Regular Production Ending Inventory Workers Required Hire Fire
1 5000
2 9000
3 7000
4 9000
Total 30,000
Which plan do you recommend and why?