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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