Question: A company wants to develop aggregate production plan for a 4 month planning horizon. The demand and working days are given below: Month Demand Days

A company wants to develop aggregate production plan for a 4 month planning horizon. The demand and working days are given below:

Month Demand Days
January 1000 22
February 800 24
March 2200 25
April 2500 19

The company was producing 100 units daily in December last years. There are 200 units in the warehouse at the beginning of January, this year. The company is running 8 hours a day. Production of one unit require 2 hours and the production requires workers.

The company has estimated the following costs:

Carrying cost 3 $/month
Regular labor cost 22 $/hour
Overtime labor cost 33 $/hour
Hiring cost 250 $/unit increase in daily production rate
Layoff cost 400 $/unit decrease in daily production rate

Develop a production plan with constant workforce. Write down the total cost of your plan.

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