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OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN : DECISIONS & CASES (by Roger Schroeder 7th Edition) , page 243 no 7b
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A company produces to a seasonal demand, with the forecast for the next 12 months as given below. The current labor force can produce 500 units per month. Each employee can produce 20 units per month and is paid $2,000 per month. The inventory-carrying cost is $50 per unit per year. Changes in the production level cost $100 per unit due to hiring or layoffs, line changeover costs, and so forth. Assume 200 units of initial inventory.
b. What is the total cost of the level strategy including regular time, inventory carrying cost and changes in production level?
