Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop itsaggregate schedule. The cost accounting department has supplied you the costs relevant to the aggregateplan, and the marketing department has provided a four-quarter forecast. All are shown as follows:
1 1,4002 1,2003 1,500
COSTSPrevious quarter’s output 1,500 units
Beginning inventory 0 unitsStockout cost for backorders $50 per unitInventory holding cost $10 per unit for every unit held at the end of the quarterHiring workers $40 per unit
Layoff workers $80 per unitUnit cost
$30 per unit
Subcontracting Not available
Your job is to develop an aggregate plan for the next four quarters.
a. First, try hiring and layoffs (to meet the forecast) as necessary.b. Then try a plan that holds employment steady.c. Which is the more economical plan for Deb Bishop Health and Beauty Products?