From Chapter 13: Aggregate Plan

Q2) Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.

Quarter	Demand	Previous quarter's output	1500 units
1	1400	Beginning inventory	200 units
2	1000	Stockout cost	$50 per unit
3	1500	Inventory holding cost	$8 per unit at end of quarter
4	1300	Hiring workers	$5 per unit
		Laying off workers	$10 per unit
		Unit cost	$30 per unit
		Overtime	$10 extra per unit

Which of the following production plans is better: Plan Achase demand by hiring and layoffs; or

Plan Bproduce at a constant rate of 1200 and obtain the remainder from overtime?

Finish the calculation.

Plan A:

Eagle Fabrication Solution

	Demand	Regular Time Capacity	Regular Time Production	Hire	Fire
Initial Inventory
Period 1	1,400	1200
Period 2	1,000
Period 3	1,500
Period 4	1,300
Total (units)	5,200
			@$30/unit	@$5/unit	@$10/unit
Subtotal Costs			$??????	$????	$????
Total Cost	$??????

Plan B:

Eagle Fabrication Solution

	Demand	Regular Time Capacity	Overtime Capacity	Regular Time Production	Overtime Production	Inventory (end PD)	Fire
Initial Inventory						200.
Period 1	1,400	1,200
Period 2	1,000
Period 3	1,500
Period 4	1,300
Total (units)	5,200
				@$30/unit	@$30+@$10 = @$40/unit	@$8/unit	@$10/unit
Subtotal Costs				$??????	$????	$????	$????
Total Cost	$??????

Answer: