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Problem 1- Aggregate planning Consider the following 12-month forecast for bicycle sales at Ogden Cycles: Jan Forecast 144 Feb 140 Mar 142 Apr Jun May 185 Jul 191 Aug 170 182 Sep 152 170 Oct 139 Nov 123 Dec 156 . . Ogden Cycles manufacturing plant works 20 days per month. The production department currently employs 7 workers, The average pay in the production department is $150 per day. Current labor productivity is 1 bike per worker per day. It costs $600 to hire a new production worker and $1,500 to let one go. Inventory holding costs are $7 per bike per month. Stockout costs are twice as much as holding costs. Overtime is paid at 1.5 times the normal rate but is limited to at most 10 days per worker per month. For quality reasons, Ogden Cycle does not hire temporary workers. . Hints: . Assume that we don't use part time workers. This means that in the attached template, for each month, the number of hires, layoffs and workers on payroll must be whole numbers. When should you hire and when should you use overtime? A new hire costs a flat fee of $600 and a labor cost of $3,000 for a total of $3,600 for the first month. Rather than hire someone, the company could use overtime if the overtime cost is less than $3,600, which is 80% of $4,500, the fulltime monthly overtime cost (1.543,000 - 4,500). Therefore, you should hire if the need exceeds 8 worker, otherwise, use overtime When should you lay off a worker? A layoff costs a flat fee of $1,500 or 5 month of production for one worker. Therefore, you should let an employee go only if the excess production capacity is greater than 5 month of production; otherwise, keep the worker. . a 1.1. Using the Excel spreadsheet provided, calculate the total cost of a chase strategy including labor, hining, layoff, overtime, inventory holding and backorder costs. 1.2. Calculate the total cost of a level strategy including all relevant costs. 1.3. Which strategy would you recommend? Answer ko 1.1. About $296,625 1.2. About $292,681 1.3. The level strategy should be selected

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