There is a short case with this, but here is the questions that I need assistance with:
1. Characterize the dominant strategy used for each of Janet's production plans, and provide a brief summary of the strengths and weaknesses of each.
2. Each of Janet's approaches offers advantages and disadvantages. If cost is the principal criterion, all three plans can be improved. For example, rather than paying overtime wages to permanent employees during the busiest months, Janet could hire "temporary" workers (who will work for at most a few months but earn regular wages and benefits). Because the "roundtrip" hiring and layoff costs for such workers amount to $3,000, she would of course need to employ the "temp." long enough for the overtime wage savings to offset the hiring and layoff costs.
A. Assuming the "temps." capacity will be used to avoid some overtime production, how long will it take (in months) to breakeven with a "Temp.?"
B. Another alternative is to build inventory during slack periods and hold it until needed, rather than produce the product at overtime rates during the period the product is needed (see plan 2). Analyze the costs tradeoffs involved and develop an appropriate decision rule that will help you decide when to use one capacity option versus another. How long (in months) can you hold inventory before overtime becomes a more attractive alternative?
3. Determine the least costly feasible intermediate production plan (hint: your plan, in linear form, should cost $6.221 million).