2. Develop an aggregate production plan for the following demand forecast for the first six months of the year. Using level strategy, calculate the total cost.

Month Demand forecast (units)

January 800

February 600

March 900

April 1100

May 1400

June 1200

Other information

Constant workforce. No overtime. No stockout. No subcontracting.

The firm accumulates inventory during slack months and

depletes it during higher demand months.

Inventory holding cost $ 10 per unit per month

Labor cost $ 10 per hour

Shift hours per day 10

Labor hours 2 per unit per worker

Number of workers 10

Days per month 20

Daily output (10/2)(10) = 50 units

Beginning inventory 20

Ending inventory 0