Question

Consider the quarterly demand of 3500, 2600, 5500, 4400, for quarters 1,2,3,4, respectively, with a beginning annual inventory of 500 and an ending annual inventory of 500. Let the production standard be 250 items/quarter. Let the carrying cost be $5/item/quarter.

Question 6. For the aggregate planning strategies listed,

what are the correct quarterly hire and fire FTES for the quarters listed?

	Select One Answer	Aggregate Planning Strategy	Quarter	Quarterly Hire FTEs	Quarterly Fire FTEs
	A	Level Capacity	1	0	3.6
	B	Chase Demand	2	0	0
	C	Level Capacity	3	11.6	0
	D	Chase Demand	4	0	4.4
	E	None of the above

Answer 1

Answer is: (E) None of the above.

Explanation:

In level production, there should not be any hire or fire in between. In option (C) there is a Hire in quarter 3, which is not possible.

In option (A) it says about a fire in quarter 1, but there is no information about available workforce. So this is not correct.

In chase strategy, we produce as demanded. There is a change of demand in quarter 3, but there is no hiring. Hence this is incorrect for option (B).

In option (D), it is firing 4.4 workers, but we can reduce only 600 production (as the actual demand reduces by 1100, but an ending inventory of 500 is required). Hence we can fire only 600/250 = 2.4

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