Question: 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

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 Forecast

1 2 3 4 5 6 7 8 9 TOTAL
190 230 260 280 210 170 160 260 180 1,940

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.

What is the total inventory cost?

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