Eric, the operating manager, is attempting to put together an aggregate plan for the coming six months. He has obtained a forecast of expected demand for the planning horizon as below. The department now has 60 full-time workers, each of whom can produce 2 units of output per day. They work for eight hours per day and the labour cost is $5 per hour. The material cost is $100 per unit and the inventory cost is $1.5 per unit per period. The subcontract cost is $125 per unit and backlog cost is $349 per unit per period. Eric is considering a plan that would involve firing six workers to start working in period 1. The hiring and firing cost for each employee is $150 and $250 respectively.

a) Determine the total cost of the plan.

Period	0	1	2	3	4	5	6	Total
Demand		2800	3300	3400	2600	2700	3000
Working days		21	19	21	21	22	20
Employees	60

b) What is aggregate planning?