A small company produces whisky. The sales person has developed the following aggregate forecasts for demand (in cases) for the next six months.

Use the following information:

Regular labour cost………………………………..$20 per case

Regular labour capacity…5,0 cases per month using 50 workers

Overtime labour cost………………………………$30 per case

Part time labour cost……………………………….$40 per case

Holding cost……………………………..$2 per case per month

Backorder cost…………………………..$10 per case per month

Beginning inventory……………………………………………0

Develop the minimum cost aggregate production plan using a level output/workforce plan, supplemented with each of tire following variables, and compute the total cost for each plan. Which plan has the lower total cost?

a. Use overtime (up to 1,000 cases per month).

b. Use a combination of overtime (500 cases per month maximum) and part-time labour (500 cases per month maximum).

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Month Jun Jul Aug Sep Oct Forecat 4,000 4,800 5,600 7,200 6,400 5,000