This is the same problem covered in the lecture videos, with a difference that there is a beginning inventory of 500 units available at the start of Month 1:

The planner at a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next 6 months. She has collected the following information:

Production per month = 20 units per worker

Initial inventory = 500 units

Desired ending inventory (at the end of month 6) = 0 units

Cost:

Hire cost = $500 per temporary worker

Inventory = $10 per tractor per month

Backorder = $150 per tractor per month

The optimum aggregate plan is:

Questions

1. What is the total cost in Month 1?

2. What is the total cost in Month 2?

Month 1 2 Demand Forecast Above the available capacity through permanent workforce 1,000 1,000 2.000 3,000 4,000 1,000 12,000 3 4 5 6 Total 1 2 3 5 6 Total 1,000 1,000 2,000 3,000 4,000 1,000 12,000 Month Forecasted Demand above regular capacity Number of temporarty workers required 50 50 100 150 200 50 Temp. Workers hired Temp. Workers laidoff Temp. Total Workers Output Output 25 0 25 25 0 50 50 0 100 75 0 175 0 0 175 0 125 50 500 1,000 2,000 3,500 3,500 1,000 11,500 0