A small company produces whisky. The sales person has developed the following aggregate forecasts for demand (in

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

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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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Operations Management

ISBN: 978-0071091428

4th Canadian edition

Authors: William J Stevenson, Mehran Hojati

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