The Bango Toy Company produces several types

  

The Bango Toy Company produces several types of toys to seasonal demand.
The forecast for the next six months in thousands of dollars is given below:
July
Dec.
Forecast
$1000
$1000 Aug.
$1500 Sept.
$2000 Oct.
$1800 Nov.
$1500 A regular employee can produce $10,000 worth of toys per month, and the
company has 80 regular employees at the end of June. Regular-time
employees are paid $2200 per month, including benefits. An employee on
overtime produces at the same rate as on regular time but is paid at 150
percent of the regular pay. Up to 20 percent overtime can be used in any one
month. A worker can be hired for $1000, and it costs $2000 to lay off an
employee. Inventory carrying costs are 30 percent per year. The company
wishes to end the year with 80 employees. Beginning inventory of toys is
$900,000.
a. Calculate the cost of a chase strategy. The cost of the chase strategy is
$2,382,000.
b. Calculate the cost of a level strategy. The level strategy cost is $2,135,232.
Realize though, the level strategy provides for the same number of workers in each
period at 146.67. This does not provide for the 80 employees required at EOY and is not
possible under a level plan.
c. Using the Excel template, simulate several other strategies.