1. Mr. Planner is assigned the task of developing an aggregate plan that yields minimum cost given the following sales forecast: (Use 1 aggregate unit = 1worker/month production)

Month: Jan Feb Mar Apr May Jun

Sales Forecast: 30 34 52 35 25 30

The relevant costs are as follows: Hiring and lay-off costs are each $1,000 per worker. Inventory carrying cost is $2 per unit per month. Regular production cost is $10 per unit and overtime production cost is 1.5 times that of regular time production. The firm for which the aggregate plan is being developed has indicated that an initial inventory of 6 units is available and an initial workforce of 40 workers is currently on the payroll. Inventory target at the end of June is six units. The firm uses 1 Aggregate Unit = Number of units produced per worker per month.

Based on the above information, answer the following questions:

1. How many workers need to be hired/fired in order to meet the sales forecast, if level workforce strategy with no overtime is used?
2. Mr. Planner has decided to use the level workforce with OT strategy with the following constraints: Use overtime at the rate of 20% of regular time in the month of peak demand. Compute the cost associated with this plan.

3. Mr. Planner is reconsidering the level workforce with overtime strategy with 20% OT in any two months. What two months would you recommend for the overtime to be used based on the criterion of minimizing cost based on key answers. Develop a solution for OT in two months as suggested in class.

d. Develop a Chase plan and compute the associated cost.