Practice_Aggregate_Capacity_Problem

Practice_Aggregate_Capacity_Problem - Aggregate Capacity...

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Michigan State University, 2004 - 1 - M Michigan State University, 2008 Aggregate Capacity Problem DeeRaj Inc. is preparing an aggregate production plan for next year. The company expects demand to be 1,000 units in quarter 1; 2,000 units in quarter 2; 4,000 units in quarter 3,; and 3,000 units in quarter 4. The company will have 750 units in inventory at the beginning of the year and desires to maintain that number at the end of each quarter as safety stock. Other information: Regular production cost = $500 per unit Inventory carrying cost = $10/unit/quarter based on quarter-ending inventory Hiring Cost = $2,000 per worker Firing/layoff cost = $3,000 per worker Beginning # of workers = 15 Each worker can produce 100 units per quarter. What is the total cost of a level plan? A chase plan (hiring and firing)? What is the savings of using the lowest cost plan?
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Michigan State University, 2004 - 2 - M Michigan State University, 2008 Level Production Plan Beginning inventory =750 Beginning workers = 15 Qrtr. Demand Regular
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