Problem 13-8 (Algo)

Appliances Inc. is preparing an aggregate production plan for washers for the next four months. The companys expected monthly demand is given below in the chart. The company will have 720 washers in inventory at the beginning of the month and desires to maintain at least that number at the end of each month. Assume hiring and layoff/firing, if necessary, occur at the beginning of the month. Below is other critical data:

Production cost per unit = $432 Inventory carrying cost per month per unit = $72 (based on ending month inventory) Hiring cost per worker = $1,440 Firing cost per worker = $2,880 Beginning number of workers = 14

Each worker can produce 144 units per month.

a. Given the planning information, develop a level production plan and a chase production plan. (Leave no cells blank - be certain to enter "0" wherever required.)

Level Plan
Month	Demand	Regular Production	Ending Inventory	Workers Required	Hire	Fire
1	6,624
2	10,080
3	5,040
4	11,664
Total	33,408

Chase Plan - Variable Workforce
Month	Demand	Regular Production	Ending Inventory	Workers Required	Hire	Fire
1	6,624
2	10,080
3	5,040
4	11,664
Total	33,408

b. Determine the cost of the two plans.

Total cost for level plan
Total cost for chase plan