Ch16_Aggregate_Planning

Ch16_Aggregate_Planning - Beginning Inventory Demand...

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January February March April May June Totals Beginning Inventory 400 450 375 275 225 275 Demand Forecast 1800 1500 1100 900 1100 1600 8000 Number of Working Days by Month 22 19 21 21 22 20 125 Costs Materials $100.00 $ per unit Inventory holding cost $1.50 $ per unit per month Marginal cost of stockout $5.00 $ per unit per month Marginal cost of subcontracting $20.00 $ per unit ($120 less $100 material cost) Hiring and training cost $200.00 $ per worker Layoff cost $250.00 $ per worker Labor hours required per unit 5.0 $ per unit Straight-line cost (first eight hours each day) $4.00 $ per hour Overtime cost (time and a half) $6.00 $ per hour Aggregate Production Planning Requirements January February March April May June Beginning Inventory 400 450 375 275 225 275 Demand Forecast 1,800 1,500 1,100 900 1,100 1,600 450 375 275 225 275 400 Production Requirement 1,850 1,425 1,000 850 1,150 1,725 Ending Inventory 450 375 275 225 275 400 Exhibits 16.4 - Costs of Four Production Plans Production Plan 1: Exact Production; Vary Workforce January February March April May June Total Production Requirement 1,850 1,425 1,000 850 1,150 1,725 Production Hours Required 9,250 7,125 5,000 4,250 5,750 8,625 Working Days per Month 22 19 21 21 22 20 176 152 168 168 176 160 Workers Required 53 47 30 25 33 54 New Workers Hired 0 0 0 0 8 21 Hiring Cost $0 $0 $0 $0 $1,600 $4,200 $5,800 Workers Laid Off 0 6 17 5 0 0 $0 $1,500 $4,250 $1,250 $0 $0 $7,000 Straight Time Cost $37,000 $28,500 $20,000 $17,000 $23,000 $34,500 $160,000 Total Cost $172,800 Production Plan 2: Constant Workforce; Vary Inventory and Stockout January February March April May June Total Beginning Inventory 400 8 -276 -32 412 720 Working Days per Month
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Ch16_Aggregate_Planning - Beginning Inventory Demand...

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