DAT, Inc. needs to develop an aggregate plan for its product line. Relevant data are DAT, Inc., needs to develop an aggregate plan for its product line. Relevant data are:
Production time 1 hour per unit Beginning inventory 500 units.
Average labor cost $10 per hour Safety stock One-half month.
Workweek 5 days, 8 hours each day Shortage cost $20 per unit per month.
Days per month Assume 20 work days per month Carrying cost $5 per unit per month.
The forecast for next year is:
JAN. FEB. MAR. APR. MAY
2,500 3,000 4,000 3,500 3,000
Management prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages. Demand not met is carried over to the following month.
Develop an aggregate plan that will meet the demand and other conditions of the problem. Do not try to nd the optimum.