Baker Manufacturing has 800 units of its fireplace implement sets in finished goods inventory. Baker's strategy calls for reducing this inventory so that after four months, there are only 200 sets in finished goods inventory. Demand forecasts for the sets for the next four months are as follows: 500, 700, 350, and 650.
The sets are produced in a relatively new manufacturing cell. Based on recent production data recorded at the cell, each production associate assigned to the cell can produce an average of 50 sets per month.
a. If Baker follows a chase-demand production plan, what will be the monthly production quantity in order to satisfy demand and also accomplish the inventory reduction goal? How many production associates must be assigned to the fireplace implement set production cell during each month?
b. If Baker follows a strict level capacity strategy and produces the same quantity of sets each month, what will be the production quantity during each of the four months? How many associates will be assigned to the cell for the four-month interval?
c. What reasonable contingencies might occur to disrupt either of these capacity plans?
d. What might Baker Manufacturing do to prepare itself for such contingencies?