Missouri’s soda pop, inc., has a new fruit juice for drink which it has high hopes. Steven Allen, the production planner has assembled the following cost data and demand forecast:forecast180011001600900costs/other dataprevious quarter’s output=1300 casesbeginning inventory=0casesstock out cost= $150 per casesinventory holding cost =$40 per case at end of quarterhiring employees=$40per caseterminating employees=$80per casesubcontracting cost= $60 per caseunit cost on regular time= $30 pr caseovertime cost=$15 extra per casecapacity on regular time=1800cases per quarterSteven’s job is to develop an aggregate plan. the three initial options he wants to evaluate are:1. plan A: a chase strategy that hires and fires personnel as necessary to meet the forecast2. plan B: a level strategy3. plan C: a level strategy that produces 1200 cases per quarter and meets the forecasted demand with inventory and subcontracting.a. which strategy is the lowest cost plan?b. if you are Steven’s boss the VP for operations, which plan do you implement and why?
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