Hill’s operations manager (see Problems 13.3 through13.5) is also considering two mixed strategies for January–August: Produce in overtime or subcontracting only when there isno inventory.◆ Plan D: Keep the current workforce stable at producing1,600 units per month. Permit a maximum of 20% overtime atan additional cost of $50 per unit. A warehouse now constrainsthe maximum allowable inventory on hand to 400 units or less.◆ Plan E: Keep the current workforce, which is producing 1,600units per month, and subcontract to meet the rest of the demand.Evaluate plans D and E and make a recommendation.
Hill’s operations manager (see Problems 13.3 through13.5) is also considering two mixed strategies for January–August: Produce in overtime or subcontracting only when there isno inventory.◆ Plan D: Keep the current workforce stable at producing1,600 units per month. Permit a maximum of 20% overtime atan additional cost of $50 per unit. A warehouse now constrainsthe maximum allowable inventory on hand to 400 units or less.◆ Plan E: Keep the current workforce, which is producing 1,600units per month, and subcontract to meet the rest of the demand.Evaluate plans D and E and make a recommendation.
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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Hill’s operations manager (see Problems 13.3 through
13.5) is also considering two mixed strategies for January–
August: Produce in overtime or subcontracting only when there is
no inventory.
◆ Plan D: Keep the current workforce stable at producing
1,600 units per month. Permit a maximum of 20% overtime at
an additional cost of $50 per unit. A warehouse now constrains
the maximum allowable inventory on hand to 400 units or less.
◆ Plan E: Keep the current workforce, which is producing 1,600
units per month, and subcontract to meet the rest of the demand.
Evaluate plans D and E and make a recommendation.
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