Chap013-calculation - Page 619 Chase demand strategy Matching capacity to demand the planned output for a period is set at the expected demand for that

# Chap013-calculation - Page 619 Chase demand strategy...

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1 Page 619 Chase demand strategy: Matching capacity to demand; the planned output for a period is set at the expected demand for that period; hiring and layoff employees No 5/640 Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaves blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of \$60 per engine. The beginning inventory is zero engines. Overtime has the cost of \$90 per engine a. Develop a chase plan that matches the forecast and compute the total cost of your plan.
Period 1 2 3 4 5 6 7 8 Forecast 120 135 140 120 125 125 140 135 Regular Regular -Forecast Overtime a normal capacity of 130 engines per month No 5/640 120 0 120-120=0 130 130-135=-5 5 130 P. 619 Chase demand strategy: MATCH DEMAND AND SUPPLY , no inventory 130-140=-10 10 120 0 0 125 0 0 125 0 0 130 130-140=-10 10 130 -5 5 Costs: 1 2 3 4 5 6 7 8 Total Regular @ 60 120*60= \$7,200 120*130= 7,800 7,800 7,200 7,500 7,500 7,800 7,800 \$60,600 Overtime @ 90 90*5=450 90*10=900 900 450 2,700 Subcontract Inventory @ 5 Backorder Total 7,200 8,250 8,700 7,200 7,500 7,500 8,700 8,250 \$63,300

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