Compare chase versus level aggregate plans:
As the manager of washing machine manufacturing company, you are needed to find out the level of output per month from your plant for next quarter. At end of September (last quarter) you had 100 finished washing machines in stock. Your company works with 20 small suppliers on fee for service of $1600 per month. On average, each supplier can give material for 10 washing machines per month.
If you decide not to use all 20 suppliers, average cost of not purchasing from supplier is $400 per supplier as the supplier has to be compensated for lost business. If you make a decision to get new suppliers, cost of contracting and training new supplier is $300 per supplier.
Your main customer has projected need of 200 washing machines in October. In November, customer projects demand of 300 washing machines and 200 again for December.
Compute total cost by using one-month planning horizon.
Compute total cost by using three-month planning horizon.