Question: DEF Company would like to develop an aggregate plan for the next 6 months via the transportation method. Forecasted demands for the next 6 months
DEF Company would like to develop an aggregate plan for the next 6 months via the transportation method. Forecasted demands for the next 6 months are shown in the table below.
| Month | 1 | 2 | 3 | 4 | 5 | 6 |
| Demand (Units) | 850 | 1040 | 1260 | 1800 | 1400 | 1150 |
The available capacity of regular time, overtime and subcontract is as follows:
Supply Capacity Available (units)
| Month | Regular time | Overtime | Subcontract |
| 1 | 800 | 160 | 400 |
| 2 | 850 | 180 | 400 |
| 3 | 850 | 180 | 400 |
| 4 | 900 | 200 | 400 |
| 5 | 950 | 220 | 400 |
| 6 | 1000 | 240 | 400 |
The firm wants all demands to be met at the end of the month 6 and its ending inventory to be 400 units. Initial inventory is 200 units. Other costs are as in the table below:
| Holding cost per unit per period | $1.5 |
| Stock-out cost per unit per period | $4.5 |
| Regular-time cost per unit | $50 |
| Overtime cost per unit | $75 |
| Subcontract cost per unit | $90 |
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- What is the total cost of the optimum aggregate plan?
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