Problem: DAT, Inc. needs to develop an aggregate plan for its product line. Its relevant data is given below:
Production Time 1 hr/unit Beginning Inventory 500 units
Std Labor Cost $10/hr Safety Stock 1000 units
Overtime 150%
Workweek 5 days, 8 hrs/day Shortage Cost $20/unit/month
Days/Month 20 Carrying Cost $5/unit/month
Demand forecast is given in the table below:
|
Month
|
Demand (units)
|
|
January
|
2500
|
|
February
|
3000
|
|
March
|
4000
|
|
April
|
3500
|
|
May
|
3500
|
|
June
|
3000
|
|
July
|
3000
|
|
August
|
4000
|
|
September
|
4000
|
|
October
|
4000
|
|
November
|
3000
|
|
December
|
3000
|
If management wants a constant workforce and to limit overtime to 10 hrs/employee/week, determine the level of employment which minimizes cost.
Make any necessary assumptions.