Problem:
Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop its aggregate schedule. The cost accounting department has supplied you the costs relevant to the aggregate plan, and the marketing department has provided a four-quarter forecast. All are shown as follows:
|
Quarter
|
Forecast
|
|
1
|
1,400
|
|
2
|
1,200
|
|
3
|
1,500
|
|
4
|
1,300
|
Previous quarter output = 1,500 units
Beginning inventory = 0 units
Stock out cost = $50 per unit
Inventory holding cost = $10 per unit for every unit held at the end of the quarter
Hiring workers = $ 40 per unit
Layoff workers= $80 per unit
Unit cost = $30 per unit
Overtime = $ 15 extra per unit
Subcontracting = not available
Your job is to develop an aggregate plan for the next four quarters.
Required:
Question 1) First, try a chase plan by hiring and layoffs (to meet the forecast) as necessary. Then try a plan that holds employment steady.
Question 2) Which is the more economical plan for Deb Bishop Health and Beauty Products? Solve the given numerical problem and illustrate step by step calculation.