Dundas Bike Components Inc. of Wheelville, Illinois, manufactures bicycle wheels in two different sizes for the Big Bike Co. assembly plant located across town. David Dundas, the firm’s owner-manager, has just received Big Bike’s order for the next six months.

Nov Dec Jan Feb Mar Apr 20-Inch Wheels 1,000 units 900 600 700 1,100 1,100 24-Inch Wheels 500 units 500 300 500 400 600

a. Under what circumstances will it be possible to develop just one aggregate plan rather than two (one for each size wheel)? Explain in two to three sentences without calculations.

b. Currently, Dundas employs 28 full-time employees, each of whom can produce 50 wheels per month in addition to their other tasks. Because labor is in short supply in the Wheelville area, David would like to develop one pure level-output plan. There is no inventory of finished wheels on hand at present, but David would like to have 300 on hand at the end of April.

Big Bike will tolerate back orders of up to 200 units per month. Show your level plan in tabular form. The amount produced using overtime should be the same except for the last month.

c. Calculate the total annual cost of your plan using these costs:

Regular $50 Hiring $300 Overtime $75 Layoff $400 Part-time NA Inventory $1.00 Subcontract NA Back order $6.00

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