Question # 2 [5.25 marks]

Develop an aggregate production plan for a Winnipeg paper producer based on the following information. Define the Total Cost for each plan.

Cost and Production Information

Regular production cost = $10 per unit

Overtime production cost = $15 per unit

Subcontracted production cost = $20 per unit

Inventory holding cost = $2 per unit per month

Backorder cost = $5 per unit per month

Hiring cost = $200 per worker hired

Termination/Firing cost = $100 per worker terminated

Overtime production limit = max of 20 units per month

Production rate = 2 units per worker per month

Opening inventory level = 10 units

Opening workforce level = 30 employees

The Demand for each one of the 6 months is defined on the tables below

1) Adopt the Level Approach using the Average Demand to be the constant production rate. You may use inventories and backorders. What is the total cost of this Aggregate Plan? [1.25 marks]

		Aggregate Production Plan			Production Breakdown			Hiring & Firing
Period	Demand	Total Prod.	Workforce	Inventory	Reg. Prod.	Overtime	Sub-cont.	Hire	Fire
0			30	10
1	50
2	70
3	100
4	120
5	60
6	60