The King Co. makes product AKUA10 and SKUB10 and is preparing an aggregate plan for the next two quarters. SKUA10 takes one labor hour per unit to produce while SKUB takes two labor hours per unit to produce. At the beginning of Quarter 1 (Q1) there are 150 units of SKUA10 and 40 units of SKUB10 in inventory. There is no need for any ending inventory at the end of Quarter 2 (Q2). The sales for SKUA10 are forecasted to be 140 units in Q1 and 50 units in Q2, while the sales for SKUB10 are forecasted to be 55 units in Q1 and 45 units in Q2.
i) Identify an appropriated aggregate unit to assist in aggregate planning?
ii) What is the initial inventory in aggregate units?
iii) What is the aggregate sales forecast for each quarter?
iv) If a chase plan is used how much, in terms of aggregate units, will be produced in each quarter? According to this aggregate plan what will be inventory and backorders at the end of Q1 and at the end of Q2?
v) If a level plan is used how much, in terms of aggregate units, will be produced in each quarter? According to this aggregate plan what will be the inventory and backorders at the end of Q1 and at the end of Q2?
vi) Which aggregate plan has higher backorders?
vii) Which aggregate plan has higher ending inventory?
viii) Distribute the aggregate production plans determined in d) and e) to the two individual products for each of Q1 and Q2. Under your proposal what will be the inventory and backorders (in aggregate units) at the end of Q1?