Planners for a firm are about to prepare the aggregate plan for one particular product that will cover the next six periods. Demand over those six periods is expected to be: 250, 200, 400, 500, 550, and 300 for total demand of 2,200.
They have regular time capacity of 350 units per period and they plan to produce that many each period. They have unlimited overtime capacity. They wil only produce in overtime to prevent a backorder/backlog. They realize that this plan could result in some inventory at the end of the sixth period. Beginning inventory is zero.
Production costs per unit are as follows:
Regular time - $2.25
Overtime - $4.00
Inventory - $1.25
Backorders - $6.50
Prepare an aggregate plan and determine its cost. Use the plan you develop to answer the questions that follow.
1. What is the average inventory for period 1?
2. What is the average inventory for period 2?
3. What is the average inventory for period 3?
4. What is the average inventory for period 4?
5. What is the average inventory for period 5?
6. What is the average inventory for period 6?
7. What is the total cost for period 1? Round to two decimal places.
8. What is the total cost for period 2? Round to two decimal places.
9. What is the total cost for period 3? Round to two decimal places.
10. What is the total cost for period 4? Round to two decimal places.
11. What is the total cost for period 5? Round to two decimal places.
12. What is the total cost for period 6? Round to two decimal places.
13. What is the total cost for the plan? Round your answer to two decimal places.