EXHIBIT 1: Level Production (Inventory but No Over-time, No Lay-o

Month Jan Feb Mar Apr May June

Production Plan
Key Number
Shipment Forecast 4400 4400 6000 8000 6600 11800
Production Plan 8440 8440 8440 8440 8440 8440
Shipments 4400 4400 6000 8000 6600 11800
Inventory 4280 8320 10760 11200 13040 9680
Extraordinary Labor Costs 4040 8320
Number of W orkers 211 211 211 211 211 211
Hirings 51 0 0 0 0 0
Layoffs 0 0 0 0 0 0
Worker Months Overtime 0 0 0 0 0 0
Cost of Alternative 1
Hiring Costs 51 $1,800 $91,800
Layoff Costs 0 $1,200 $-
Inventory Holding Costs 75000 $8 $600,000
Labor Costs
Regular 2532 $2,400 $6,076,800
Overtime 0 $3,300 $-
Total Costs $6,768,600

EXHIBIT 2: Chase Production-Const W orkforce and Over-time but No Inventory

Month Jan Feb Mar Apr May June
Production Plan
Shipment Forecast 4400 4400 6000 8000 6600 11800
Production Plan 4160 4400 6000 8000 6600 11800
Shipments 4400 4400 6000 8000 6600 11800
Inventory 0 0 0 0 0 0
Key Number
Extraordinary Labor Costs
Number of W orkers 199 199 199 199 199 199
Hirings 39 0 0 0 0 0
Layoffs 0 0 0 0 0 0
Worker Months Overtime 0 0 0 1 0 96
Cost of Alternative 2 295
Hiring Costs 39 $1,800 $70,200
Layoff Costs 0 $1,200 $0
Inventory Holding Costs 0 $8 $0
Labor Costs
Regular 2388 $2,400 $5,731,200
Overtime 375 $3,300 $1,237,500
Total Costs $7,038,900

EXHIBIT 3: Chase Production - Vary W orkforce & Lay-offs but No Over-time, No Inventory
Month Jan Feb Mar Apr May June
Production Plan

Shipment Forecast 4400 4400 6000 8000 6600 11800

Production Plan 4160 4400 6000 8000 6600 11800
Shipments 4400 4400 6000 8000 6600 11800
Inventory 0 0 0 0 0 0
Extraordinary Labour Costs
Number of W orkers 104 110 150 200 165 295
Hirings 0 6 40 50 0 130
Layoffs 56 0 0 0 35 0
Worker Months Overtime 0 0 0 0 0 0
Cost of Alternative 3
Hiring Costs 256 $1,800 $460,800
Layoff Costs 276 $1,200 $331,200
Inventory Holding Costs 0 $8 $0
Labour Costs
Regular 2379 $2,400 $5,709,600
Overtime 0 $3,300 $0
Total Costs $6,501,600
ry but No Over-time, No Lay-off)
July Aug Sep Oct Nov Dec Total

13000 11200 10800 7600 6000 5600 95400

8440 8440 8440 8440 8440 8440 101280
13000 11200 10800 7600 6000 5600 95400
5120 2360 0 840 3280 6120 75000

211 211 211 211 211 211 2532

0 0 0 0 0 0 51
0 0 0 0 0 0 0
0 0 0 0 0 0 0

and Over-time but No Inventory, No Lay-off

July Aug Sep Oct Nov Dec Total

13000 11200 10800 7600 6000 5600 95400

13000 11200 10800 7600 6000 5600 95160
13000 11200 10800 7600 6000 5600 95400
0 0 0 0 0 0 0
0

199 199 199 199 199 199 2388

0 0 0 0 0 0 39
0 0 0 0 0 0 0
126 81 71 0 0 0 375

July Aug Sep Oct Nov Dec Total

 0
13000 11200 10800 7600 6000 5600 95400
13000 11200 10800 7600 6000 5600 95160
13000 11200 10800 7600 6000 5600 95400
0 0 0 0 0 0 0

325 280 270 190 150 140 2379

30 0 0 0 0 0 256
0 45 10 80 40 10 276
0 0 0 0 0 0 0
 Key Details
Maximum Monthly Capacity 13000
Unionized Worked 160
Union Worker Hourly Rate $ 10.50
Union Worker Monthly Cost $ 2,400
Union Worker Monthly Overtime Cost $ 3,300
Hiring Costs per worker $ 1,800
Severence and Layoff Costs $ 1,200
Inventory Holding Cost $ 8
Finished Inventory Dec 31 240

Combination 1: Lowest Cost -

Requires 110 Layoffs
EXHIBIT 4-1: Production Plan - Lowest Cost
Month Jan Feb Mar Apr May June
Production Plan

Shipment Forecast 4400 4400 6000 8000 6600 11800

Production Plan 6400 6400 6400 6400 8400 10000
Shipments 4400 4400 6000 8000 6600 11800
Inventory 2240 4,240 4,640 3,040 4,840 3,040

Extraordinary Labour Costs

Number of W orkers 160 160 160 160 210 250
Hirings 0 0 0 0 50 40
Layoffs 0 0 0 0 0 0
Worker Months Overtime 0 0 0 0 0 0

Cost of Alternative 3
Hiring Costs 90 $1,800 $162,000
Layoff Costs 110 $1,200 $132,000
Inventory Holding Costs 22080 $8 $176,640
Labour Costs
Regular 2330 $2,400 $5,592,000
Overtime 49 $3,300 $161,700
Total Costs $6,224,340

Combination 3: Second Lowest Cost - Requires 100 LayoffsAdditional Cost $30,120

EXHIBIT 4-2: Production Plan - Lowest Overtime
Month Jan Feb Mar Apr May June
Production Plan

Shipment Forecast 4400 4400 6000 8000 6600 11800

Production Plan 6400 6400 6400 8000 8000 10000
Shipments 4400 4400 6000 8000 6600 11800
Inventory 2240 4,240 4,640 4,640 6,040 4,240

Extraordinary Labour Costs

Number of W orkers 160 160 160 200 200 250
Hirings 0 0 0 40 0 50
Layoffs 0 0 0 0 0 0
Worker Months Overtime 0 0 0 0 0 0

Cost of Alternative 3
Hiring Costs 90 $1,800 $162,000
Layoff Costs 100 $1,200 $120,000
Inventory Holding Costs 27720 $8 $221,760
Labour Costs
Regular 2370 $2,400 $5,688,000
Overtime 19 $3,300 $62,700
Total Costs $6,254,460

Combination 2: Second Lowest Cost - Requires 75 Layoffs Additional Cost $4,760

EXHIBIT 4-3: Our Production Plan - Lowest Layoffs
Month Jan Feb Mar Apr May June
Production Plan

Shipment Forecast 4400 4400 6000 8000 6600 11800

Production Plan 6400 6400 6400 6400 6400 9000
Shipments 4400 4400 6000 8000 6600 11800
Inventory 2240 4,240 4,640 3,040 2,840 40

Extraordinary Labour Costs

Number of W orkers 160 160 160 160 160 225
Hirings 0 0 0 0 0 65
Layoffs 0 0 0 0 0 0
Worker Months Overtime 0 0 0 0 0 0

Cost of Alternative 3
Hiring Costs 65 $1,800 $117,000
Layoff Costs 75 $1,200 $90,000
Inventory Holding Costs 17440 $8 $139,520
Labour Costs
Regular 2190 $2,400 $5,256,000
Overtime 199 $3,300 $656,700
Total Costs $6,259,220

Conclusion
Greatest qualitive damage is done when laying off employees but management must also be aware of the efficienc
overtime hours. Option 1 provides the lowest cost but requires 110 layoffs and 49 overtimes months. Option two re
reduces overtime costs for an additional cost of $30,120. Finally, option 3 reduces layoffs to 75 but increases overti
cost to only $34,880 from option 1 and $4,760 from option 2. The danger of this approach is that efficiency and mo
overtime hours. Management to use option 2 as it limits overtime hours. While it may be attractive to reduce layoff
the risk of more overtime.
n Plan - Lowest Cost
July Aug Sep Oct Nov Dec Total

0
13000 11200 10800 7600 6000 5600 95400
10000 11160 10800 7600 6000 5600 95160
13000 11200 10800 7600 6000 5600 95400
40 - - - - - 22080

250 250 250 190 150 140 2330

0 0 0 0 0 0 90
0 0 0 60 40 10 110
0 29 20 0 0 0 49

lan - Lowest Overtime

July Aug Sep Oct Nov Dec Total

0
13000 11200 10800 7600 6000 5600 95400
10000 10000 10760 7600 6000 6000 95560
13000 11200 10800 7600 6000 5600 95400
1,240 40 - - - 400 27720

250 250 250 190 150 150 2370

0 0 0 0 0 0 90
 0 0 0 60 40 0 100
0 0 19 0 0 0 19

n Plan - Lowest Layoffs

July Aug Sep Oct Nov Dec Total

0
13000 11200 10800 7600 6000 5600 95400
12960 11200 10800 7600 6000 6000 95560
13000 11200 10800 7600 6000 5600 95400
- - - - - 400 17440

225 225 225 190 150 150 2190

0 0 0 0 0 0 65
0 0 0 35 40 0 75
99 55 45 0 0 0 199

also be aware of the efficiency and morale issues that arise with higher
ertimes months. Option two reduces the number of layoffs to 100 and also
offs to 75 but increases overtime from 49 to 199 bringing the total increase in
oach is that efficiency and moral may be reduced by such a high number of
y be attractive to reduce layoffs by 25 as found in option 3 ,it would increase