A manager is attempting to put together an aggregate plan for the coming nine months. She has obtained a forecast of expected demand for the planning horizon. The plan must deal with highly seasonal demand; demand is relatively high in periods 3 and 4 and again in period 8, as can be seen from the following forecasts:

Period	1	2	3	4	5	6	7	8	9	Total
Forecost	190	230	260	280	210	170	160	260	180	1940

The department now has 20 full-time employees, each of whom can produce 10 units of output per period at a cost of $6 per unit. Inventory carrying cost is $5 per unit per period, and backlog cost is $10 per unit per period. The manager is considering a plan that would involve hiring two people to start working in period 1, one on a temporary basis who would work only through period 5. This would cost $500 in addition to unit production costs.

a. What is the rationale for this plan?

b. Determine the total cost of the plan, including production, inventory, and back-order costs.

Answer rating: 100% (QA)

an aggregate plan using the information given With 20 permanent workers initially with each producin... View the full answer