The Shafer Company has the following demand data for the last 2 years of sales for all models of their popular Polybob product:

The Shafer Company currently has five employees on the Polybob line, each capable of producing approximately two polybobs per day (assume 25 days per month). It costs them $4,000 per person to hire a new person, and $6,000 to lay a person off. The employees each earn $20 per hour for the standard 8-hour day, with $10 extra per hour premium for each hour of overtime. Each employee is limited to no more than 5 days of overtime per month. They can subcontract the production of the polybob, but to do so costs them $42 per unit above the normal standard cost. They can use inventory, but inventory holding costs are $25 per month per unit, based on the number of units in inventory at the end of the month. They have room for only 200 units in inventory, after which they must use a public storage facility, which adds another $15 per month to the inventory holding cost. They currently have (as of the end of December 2001) 29 units in inventory.

a. Use the demand data to develop a forecast for 2002 annual demand (month by month). What method did you use and why?

b. Use your forecast data to develop the "best" aggregate plan you can with the data given. Discuss why you think your method is the best, and also discuss the pros and cons of using your method over alternative approaches.

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Month 2000 Demand 2001 Demand January 233 254 February 301 325 March 421 398 April 355 369 May 296 324 June 288 297 July 232 255 August 194 241 September 273 256 October 243 266 November 221 235 December 247 249