Summer Fun, Inc., produces a variety of recreation and leisure products. The production manager has developed an aggregate forecast:
Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. You will need extra output in April and August to accommodate demand in the following months.
a. Use regular production. Supplement using inventory, overtime, and subcontracting as needed. No backlogs allowed.
b. Use a level strategy. Use a combination of backlogs, subcontracting, and inventory to handle variations in demand. There should not be a backlog in the final period.