Fred's Fabrication Has the Following Aggregate Demand Requirements and Other

Essay

Fred's Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.
$$\begin{array} { | l | l | l | l | } \hline \text { Quarter } & \text { Demand } & \text { Previous quarter's output } & 800 \text { units } \\\hline 1 & 700 & \text { Beginning inventory } & 0 \text { units } \\\hline 2 & 900 & \text { Stockout cost } & \$ 100 \text { per unit } \\\hline 3 & 1200 & \text { Inventory holding cost } & \$ 10 \text { per unit at end of quarter } \\\hline 4 & 600 & \text { Hiring workers } & \$ 20 \text { per unit } \\\hline & & \text { Laying off workers } & \$ 40 \text { per unit } \\\hline & & \text { Subcontracting cost } & \$ 200 \text { per unit } \\\hline & & \text { Unit cost } & \$ 100 \text { per unit } \\\hline\end{array}$$ Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; Plan B-pure level strategy, or Plan C-700 level with the remainder by subcontracting?