The Chewy Candy Company would like to determine an aggregate production plan for the next six months. The company makes many different types of candy but feels it can plan its total production in pounds provided that the mix of candy sold does not change too drastically.
At the present time, the Chewy Company has 70 workers and 9000 pounds of candy in inventory.
Each worker can produce 100 pounds of candy a month and is paid $12 an hour (use 160 hours of regular time per month). Overtime, at a pay rate of 150 percent of regular time, can be used up to a maximum of 20 percent in addition to regular time in any month. It costs 80 cents to store a pound of candy for a year, $200 to hire a worker, and $500 to lay off a worker. The forecast sales for the next six months are 8000, 10,000, 12,000, 8000, 6000, and 5000 pounds of candy.
a. Determine the costs of a level production strategy for the next six months, with an ending inventory of 8000 pounds.
b. Determine the costs of a chase strategy for the next six months.
c. Calculate the costs of using the maximum over time for the two months of highest demand.
d. Draw a cumulative graph of demand and of the three production strategies considered above.