TABLE 1: Forecasted demand and working days

working days (jan to june)= 22,19,21,21,22,20

TABLE 2: Costs

Inventory holding cost Cost of stockout Cost of subcontracting Hiring and training cost Layoff/firing cost Labor hours required Straight-line cost (first 8 hours each day) Overtime cost (time and half)

$1.50/unit/month $5/unit/month $20/unit $200/worker $250/worker 5 hours/unit $4/hour $6/hour

TABLE 3: Initial inventory and safety stock requirements

Beginning inventory Safety stock

400 units 25% of month demand

NOTE: Straight-line production cost = regular-time (8 hours each day) production cost.

Table 4: Aggregate Production Planning Requirements
	January	February	March	April	May	June
Beginning inventory	400	450	375	275	225	275
Demand forecast	1800	1,500	1,100	900	1,100	1,600
Safety stock (.25 x Demand forecast)	450	375	275	225	275	400
Production requirement (Demand forecast + Safety stock - Beginning inventory)	1850	1425	1000	850	1150	1725
Ending inventory (Beginning inventory + Production requirement - Demand forecast)	450	375	275	225	275	400

PLAN 2: Level Strategy with constant workforce level. Produce to meet forecasted demand over the next six months by maintaining a constant workforce. What is the minimum number of workers needed in this case? For this plan, assume that the available workforce at the start of January is equal to the minimum number of workers needed for this plan (to be determined). In other words, there will be no hiring and firing for this plan.

NOTE 2: In this plan, inventory is allowed to accumulate, with shortages (stockouts) filled from next months production by back ordering. Since XYZ carries a safety stock in each month (refer to Table 4), the inventory costs in each month are calculated based on the units excess (Ending inventory Safety stock) of each month only if this amount is positive.

Use the information given in Tables 1, 2, 3, and 4 to fill in appropriate values for the quantities listed in the first column of the following table (Table 6) for each month (January to June) of the planning period. What is the total cost of production plan 2? (6 marks)

NOTE 3: In solving this aggregate plan, please be sure to give explicit equations/calculations you have used to obtain the number of workers required and the quantities in the first column of TABLE 6 below for the months of January, February and March.: CONSTANT WORKFORCE; VARY INVENTORY AND USE STOCKOUT (IF NECESSARY).

Actual production = actual number of units produced in each month.

Production Plan level strategy
No. Of Workforce Required	?
(constant workforce)
	Jan	Feb	Mar	Apr	May	Jun	TOTAL
Beg. Inventory
Workng Day Per Month							?
Production Hour Available
Actual Production
Demand Forecast
Ending Inventory
Shortage Cost							?
Safety Stock
Units Excess
Inventory Cost							?
Straight Time Cost							?
						TOTAL	?