b) Develop an aggregate production plan for a Winnipeg paper producer based on the following information. Define the Total Cost for each plan. [8 marks]

Cost and Production Information

Regular production cost = $10 per unit Overtime production cost = $15 per unit Subcontracted production cost = $20 per unit Inventory holding cost = $2 per unit per month Backorder cost = $5 per unit per month

Hiring cost = $200 per worker hired Termination/Firing cost = $100 per worker terminated Overtime production limit = max of 20 units per month Production rate = 2 units per worker per month Opening inventory level = 10 units Opening workforce level = 30 employees

The Demand for each one of the 6 months is defined on the tables below

1) Adopt the Chase Approach. You can use hiring and firing, but not overtime or subcontracted production. What is the total cost of this Aggregate Plan? [4 marks]

Aggregate Production Plan

Production Breakdown

Hiring & Firing Hire Fire

Period 0

1 2 3 4 5 6

Demand

50

 70 100 120 60 60 

Total Prod

Workforce Inventory

3010

Reg. Prod

Overtime

Sub-cont.

14

2) Modify Part 1 limit the number of hiring to max of 10 in each month (no overtime or subcontracted production). What is the total cost of this Aggregate Plan? [4 marks]

Aggregate Production Plan

Production Breakdown

Hiring & Firing Hire Fire

Period 0

1 2 3 4 5 6

Demand

50

 70 100 120 60 60 

Total Prod

Workforce Inventory

3010

Reg. Prod

Over-time

Sub-cont.