Develop aggregate production plans and calculate the relevant costs using the following strategies.

Assume that hired workers will work from the first day of the hiring month and laid-off workers will stop working on the first day of the month.

Show the resulting aggregate production plan and the corresponding relevant costs using the worksheet format available on eClass.

1. Plan A: SMC wants to develop a level production plan for this mobile juicer cup JG-142 in order to meet the demand and planned ending inventory.
2. Plan B: SMC wants to develop a chase production plan for this mobile juicer cup JG-142 in order to meet the demand and planned ending inventory.
3. Based on the total cost, which plan do you recommend A or B, why?

Smart Manufacturing Company (SMC) manufactures a variety of products other than the drum components for printers. Their high selling mobile juicer cup JG-142 has the following expected demand sales figures (in units) over the coming six months: Month 1 2 3 4 5 Expected Demand (units) 17680 23040 21120 16640 21760 The following planning parameters apply: Planning Parameters 26 Current number of workers Output rate per worker Number of regular time hours Number of working days Regular time labour cost Overtime labour cost Maximum overtime hours allowed Hiring cost (including training) Layoff cost Inventory carrying cost Backorder cost Opening inventory 4 units/hour 8 hours/day 20 days/month $14.00 /hour 6 18300 $21.00 /hour 20% of regular worker-hours/month $950 /worker $1780 /worker $1.75 /unit/month $7.00/unit backordered 400 units 900 units $15 /unit Planned ending inventory (end of month 6) Material Cost Subcontracting Cost with material Maximum subcontracting allowed Answer the following questions independently: Total 118540 $35 /unit 60% of the actual units produced by workforce