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Use the information below to answer questions 4(a) 4(c) Month January February March April May June Number of Working Days 22 18 21 21 22 20 Demand per Day 41 39 38 57 68 55 Cost Information: Inventory carrying cost $5 per unit per month Subcontracting cost per unit Average pay rate Overtime pay rate Labor-hours to produce a unit Cost of Increasing daily production rate (hiring and training) Cost of decreasing daily production rate (layoffs) $10 per unit $5 per hour ($45 / day) $7 per hour (above 8 hours per day) 1.6 hours per unit $300 per unit $600 per unit Question: a) The plan 1 (constant workforce). The production 50 units per day. How much total units of inventory carried over from one month to the next? If the workforce required to produce 50 units per day = 10, how much the total costs? b) The Plan 2 (subcontracting). If minmimum requirement = 38 units per day. How much in-house production? and how much the subcontracting units? How is the total costs (regular and subcontracting)? c) The plan 3 (firing and hiring). Calculate the Basic Production cost, extra cost of increasing production (hiring cost), extra cost of decreasing production (layoff cost) and the total costs (for each month). And compare the three plans, which plan has a lowest cost option

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