A small manufacturing plant is considering their aggregate plan for the next fiscal year. They are limited to a maximum number of 32 FTEs each quarter. Their forecasted demand for next year is: Quarter 1 2 3 4 Demand 12000 14200 15400 13200 They do not consider hiring or firing costs but have the following production parameters.
Labor Standard = 1.3 hours/item
Regular Time Labor Cost = $22/hour
Beginning Annual Inventory Level = 1000
Ending Annual Inventory Level = 1000 Unit
Inventory Carrying Cost = $4/item/quarter
Any overtime labor in a quarter is time and a half. (Assume 40 hours/week, 52 weeks/year, and 4 quarters/year.)
1. For next fiscal year, find their annual regular time direct labor cost and overtime direct labor cost for a level capacity aggregate planning strategy.
2. For next fiscal year, find their annual regular time direct labor cost and overtime direct labor cost for a chase demand aggregate planning strategy.