Q1 Aggregate Planning PT KOE is a company that produces processed products from milk. PT KOE's...

Transcribed Image Text:

Q1 Aggregate Planning PT KOE is a company that produces processed products from milk. PT KOE's most popular product is banana flavoured yoghurts. Demand for banana flavoured yoghurts follows an up and down pattern for four quarters of the year, peaking in the second and fourth quarters when special promotions are held. Quartal Forecasted Demand 1 70,000 2 100,000 3 50,000 4 150,000 Production is handled by a highly skilled local workforce for 40 hours a week (without overtime and subcontract). The number of initial workers is 40 people, production per worker is 1,250 units per worker quarterly, hiring costs are $500 per worker, layoff costs are $600 per worker, holding costs are $1 per unit per quarter, and regular manufacturing costs are $10 per unit. At the end of every year PT KOE empties their inventory. PT KOE is currently using a production strategy level but would like to evaluate other options. Make a production plan and calculate costs for each strategy: a. Level production (hint: production uses the average demand; because there is no overtime and subcontracts then residual production will go to inventory) b. Chase demand production Which strategy should PT KOE choose? Q1 Aggregate Planning PT KOE is a company that produces processed products from milk. PT KOE's most popular product is banana flavoured yoghurts. Demand for banana flavoured yoghurts follows an up and down pattern for four quarters of the year, peaking in the second and fourth quarters when special promotions are held. Quartal Forecasted Demand 1 70,000 2 100,000 3 50,000 4 150,000 Production is handled by a highly skilled local workforce for 40 hours a week (without overtime and subcontract). The number of initial workers is 40 people, production per worker is 1,250 units per worker quarterly, hiring costs are $500 per worker, layoff costs are $600 per worker, holding costs are $1 per unit per quarter, and regular manufacturing costs are $10 per unit. At the end of every year PT KOE empties their inventory. PT KOE is currently using a production strategy level but would like to evaluate other options. Make a production plan and calculate costs for each strategy: a. Level production (hint: production uses the average demand; because there is no overtime and subcontracts then residual production will go to inventory) b. Chase demand production Which strategy should PT KOE choose?