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Savings 130000 p1move 600 sc units from p3 to p2

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Unformatted text preview: Savings: $24,000 Total savings: $154,000 18 3 Aggregate Planning Additional considerations: 1. Someone has to determine production requirements before aggregating. 2. Someone has to determine capacities. Developing Aggregate Plan. For aggregate planning, we consider a number of periods; the total span is called the planning horizon. For planning, we can planning use different strategies: Chase, Level or a combination. Chase, Chase Strategy: produce quantity equal to aggregate demand for each period in order to keep inventory level zero. Advantages Investment in inventory is low Labor utilization in high Disadvantages The cost of adjusting output rates and/or workforce levels. Level Strategy: Produce quantity equal to the average requirement over the planning horizon. Advantages Stable output rates and workforce Disadvantages Greater inventory costs Methodology: 1. Determine aggregate plan, then budget, then adjustments to improve cost improve cost. 2. Prepare a plan to minimize total cost using techniques such as...
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