Question: Fisher - Price is developing an aggregate plan for a popular line of power wheels kids ride - on toys. The company has collected the

Fisher-Price is developing an aggregate plan for a popular line of power wheels kids ride-on toys. The company has collected the following key inputs for its aggregate planning process in Table 1.
Table 1
Parameter Value
Previous Month's Production (Month 0) in units 1,399
Starting inventory in units 0
Production Cost per unit $198
Hiring Cost per unit $32
Layoff Cost per unit $68
Cost of holding inventory per unit per month $26
Cost of a backorder per unit per month $62
The company forecasts the demand for the 6 months of the planning horizon and provides the forecasts in Table 2.
Table 2
Month Demand
11,037
22,814
33,270
42,713
51,484
62,252
Calculate the total cost over the planning horizon for a level strategy that uses inventory but no backorders.
How should you set the production level to minimize the cost of this plan?
Round up the nearest whole unit when deriving the production value to use in each period.
Carry all calculations to 3 decimal places.
Enter your final answer rounded to the nearest dollar.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!