Nowjuice, Inc., produces Shakewell ® fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next six months.
Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost? Backlogs are not allowed.
a. Use level production. Supplement using overtime as needed.
b. Use a combination of overtime (500 cases per period maximum), inventory, and subcontracting (500 cases per period maximum) to handle variations in demand.
c. Use overtime up to 750 cases per period and inventory to handle variations indemand.