Develop chase strategy and level strategy

Saturday July 9, 2022

Develop chase strategy and level strategy

|
April 15, 2017

Develop a Chase Strategy and a Level Strategy for JXA, based on the following information. The Level Strategy requires that JXA uses a constant workforce equal to the minimum expected demand and subcontracting to meet additional requirements. (Each unit requires 2 hours of production.)
Jun    Jul      Aug     Sep    Oct      Nov

Beginning Inventory                          1500 250     2000   1500   1200   1350

Demand Forecast                             1700   1200   1200   800     1800   1600

Number of Working Days by Month  22       22       20       21       20       22

Costs

Materials                                                                 $350.00    $ per unit

Inventory holding cost                                                 $3.50   $ per unit per month

Marginal cost of stockout                                          $25.00 $ per unit per month

Marginal cost of subcontracting                               $50.00  $ per unit ($120 less $100 material cost)

Hiring and training cost                                         $2000.00   $ per worker

Layoff cost                                                            $3500.00   $ per worker

Labor hours required per unit                                       2.00   $ per unit

Straight-line cost (first eight hours each day)           $12.00   $ per hour

Overtime cost                                                           $20.00   $ per hour

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Category: Accounting and Finance


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