The planner at a company that makes garden tractors is about to prepare an aggregate production plan
Question:
The planner at a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next 6 months. She has collected the following information:
Month | Demand Forecast Above the available capacity through permanent workforce |
1 | 1,000 |
2 | 1,000 |
3 | 2,000 |
4 | 3,000 |
5 | 4,000 |
6 | 1,000 |
Total: | 12,000 |
Production per month = 20 units per worker
Initial inventory = 500 units
Desired ending inventory (at the end of month 6) = 0 units
Cost:
Hire cost = $500 per temporary worker
Inventory = $10 per tractor per month
Backorder = $150 per tractor per month
The optimum aggregate plan is:
Month | 1 | 2 | 3 | 4 | 5 | 6 | Total |
Forecast Demand above regular capacity | 1,000 | 1,000 | 2,000 | 3,000 | 4,000 | 1,000 | 12,000 |
# of temporary workers required | 50 | 50 | 100 | 150 | 200 | 50 | |
Temp. Workers hired | 25 | 25 | 50 | 75 | 0 | 0 | |
Temp. workers laid off | 0 | 0 | 0 | 0 | 0 | 125 | |
Temp. Total workers | 25 | 50 | 100 | 175 | 175 | 50 | |
Output | 500 | 1,000 | 2,000 | 3,500 | 3,500 | 1,000 | 11,500 |
0 |
1. What is the ending inventory in Month 1?
2. What is the total cost in Month 1?
3. What is the total cost in Month 2?
4. What is the total cost in Month 2?