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# Strategic use of resources

This was submitted to brainmass earlier, and I received some help but I still have questions. I post the outline I am using for this problem. I paste the previously answer.
A company produces to a seasonal demand, with the forecast for the next 12 months as given below.

The present labor force can produce 500 units per month. Each employee added can produce an additional 20 units per month and is paid \$1000 per month. The cost of materials is \$30 per unit. Overtime can be used at the usual premium of time and a half for labor up to a maximum of 10 percent per month. Inventory-carrying cost is \$50 per unit per year. Changes in production level cost \$100 per unit due to hiring, line changeover costs, and so forth. Assume 200 units of initial inventory. Extra capacity may be obtained by subcontracting at an additional cost of \$15 per unit over and above the company's producing them itself on regular time.

Provide a detailed cost breakdown for using a level vs. a chase strategy to meet the increased demand. Which strategy do you recommend? How much savings would result from the plan you recommend?

Month Demand
January 600
February 700
March 800
April 700
May 600
June 500
July 600
August 700
September 800
October 900
November 700
December 600

This how I outline the problem
Figure-1 CHASE Strategy

CHASE JAN FEB MAR APR MAY JUN JUL AUG
SEPT OCT NOV DEC
Forecast Demand 600 700 800 700 600 500 600 700 800 900 700 600

Output Regular Production 500 500 500 500 500 500 500 500 500 500 500 500

Extra Production- I am having problems getting the extra production for each month
Total Production- How do I get the total production for each month?
Resources Regular Workers for each month- 25 25 25 25 25 25 25 25 25 25 25 25

Chase RegularWorkers- ( How do you calculate this answer for each month? I keep coming-up with something different.
Total Regular Workers for each month- ?
Inventory 200 200 200 200 200 200 200 200 200 200 200 200

Costs
Regular wage for each month-
Chase Regular wage for eachmonth-
Total
Wages for each month-
ICC -
Material-
CiP-

Figure-2 LEVEL Strategy

LEVEL JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total
Forecast
Demand 600 700 800 700 600 500 600 700 800 900 700 600

Output Regular
Production 500 500 500 500 500 500 500 500 500 500 500 500

Extra Production- (how do I calculate this?)
Total Production for each month-

Resources
Regular Workers 25 25 25 25 25 25 25 25 25 25 25 25

O/T Workers for each month-
Subcontract Workers for each month-
Total Workers-
Starting Inventory- 200
Ending Inventory-

Costs-
Regular Wages each month-
O/T Wages each month-
Subcontractor Wages-
Total Wages-

ICC-
Material-
CiP-
I need to do a thorough analysis of the possible alternative strategies for Chase and Level methods and provide the one most cost effective strategy for each. I need to make sure I compare costs for each option and total them annually.

This is the reponse I received from Brainmass. I am still not clear how the answers were calculated. I have a problem on how to get the formula to the calculations.

Inventory Subcontracting Cost Changing cost Inventory cost
January 600 500+200 100
February 700 500 -100 15,000
March 800 700 -100 15,000 20,000
April 700 700 0
May 600 700 100
June 500 700 300
July 600 700 400
August 700 700 400
September 800 700 300
October 900 700 100
November 700 700 100
December 600 700 200

30,000 20,000 8333.333333 58,333 Total
Chase Strategy
Month Demand Diff.in.Prod Changeover Cost Inventory cost
January 600 -100 0
February 700 100 10000
March 800 300 20000
April 700 200 10000
May 600 100 10000
June 500 0 10000
July 600 100 10000
August 700 200 10000
September 800 300 10000
October 900 400 10000
November 700 200 20000
December 600 100 10000
130000 416.6666667 130416.6667 Total

Savings= 72,083

\$2.19