SOLVED PROBLEM 1

10. Refer to Solved Problem 1. Prepare two additional aggregate plans. Call the one in the solved problem plan A. For plan B, hire one more worker at a cost of $200. Make up any shortfall using subcontracting at $8 per unit, with a maximum of 20 units per period (i.e., use subcontracting to reduce back orders when the forecast exceeds regular output). Note that the ending inventory in period 9 should be zero. Therefore, Total forecast Total output = Quantity subcontracted. An additional constraint is that back orders cannot exceed 80 units in any period. For plan C, assume no workers are hired (so regular output is 200 units per period instead of 210 as in plan B). Use subcontracting as needed, but no more than 20 units per period. Compute the total cost of each plan. Which plan has the lowest cost? Assume regular monthly production = regular capacity.

A manager is attempting to put together an aggregate plan for the coming nine months. She has obtained a forecast of expected demand for the planning horizon. The plan must deal with highly seasonal demand; demand is relatively high in periods 3 and 4 , and again in period 8 , as can be seen from the following forecasts. The department now has 20 full-time employees, each of whom produces 10 units output per period at a cost of $6 per unit. Beginning inventory for period 1 is zero. Inventory carrying cost is $5 per unit per period, and backlog cost is $10 per unit per period. a. Will the current workforce be able to handle the forecast demand? b. Determine the total cost of the plan, including production, inventory, and backorder costs. a. With the current workforce of 20 people, each producing 10 units per period, regular capacity is 1,800 units for the nine-month period. That is 140 units less than expectetl demand. So there will be a backlog of unfilled demand if actual demand equals the forecast