SECTION $B$: $(There$ are six questions. Answer any FOUR questions, @ $20$ marks$)$

Question $4$: Aggregate Planning $-$ Eight Glasses $of$ Water a Day

The Evian Company has recently expanded its bottled spring water operations $to$ include

several new minerals. Marketing manager Mandy Wong $is$ predicting $an$ upturn $in$ demand

based $on$ the new offerings during the summer and the increased public awareness $of$ the health

benefits $of$ drinking more water. She has prepared the aggregate forecasts for the next six

month, $as$ shown $in$ the following table $(Quantities$ are $in$ thousand boxes$)$:

Production manager Tim Tong has developed the following information. $(Note$ that one box

contains $100$ bottles$)$

Among the strategies being considered are the following, develop the aggregate plans with

their cost summary accordingly, which plan you would recommend Tim $to$ adopt? Make sure

there $isno$ Backorder $in$ Oct, which means the total production must equal the total demand.

$(2$ marks$)$

$[Note$: Solution templates are provided $in$ Appendix III$]$

$a.$ Use regular production capacity supplemented $by$ maximum $upto10(thousands)$ boxes

$of$ overtime a month. $No$ subcontracting $is$ allowed. $(6$ marks$)$

$b.$ Use chase strategy with a combination $of$ overtime $(maximum10(thousands)$ boxes

overtime a month$)$ and subcontracting. $No$ backorder $is$ allowed. Workers can $be$

assigned $to$ other jobs $if$ the demand $is$ less than the regular production capacity.

$(6$ marks$)$

$c.$ Using overtime for $upto15(thousands)$ boxes a month, along with inventory $to$ handle

demand variations. $No$ subcontracting $or$ backorder $is$ allowed. $(6$ marks$)$ Appendix III $-$ Aggregate Plan for Question $4a.$

Aggregate Plan for Question $4b.$