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ABC Company produces video telephones for its home market. It needs to develop Aggregate plans for the next six months. Given the following information
ABC Company produces video telephones for its home market. It needs to develop Aggregate plans for the next six months. Given the following information in Table Q5(a) and Table Q5(b) determine the aggregate plans. Assume as the beginning of January, the company holds 400 units of inventory. The company also plans to maintain 25% of month demand as safety stock. Materials $100.00/unit $1.50/unit/month $5.00/unit/month Inventory Holding Cost Marginal Cost of Stock-out Hiring and Training Cost $200.00/worker Layoff Cost $250.00/worker 5 hours/unit $4.00/hour $6.00/hour Labor Hours Required Straight-time Cost (first eight hours each day) Overtime Cost January Demand Forecast 1,800 Number of Working Days 22 (b) (c) Table Q5 (a) February March April 900 21 May June 1,100 1,600 22 20 Totals 8,000 125 1,500 1,100 19 21 Table Q5 (b) What is the cost of each of the following production strategies: (1) Produce to exact monthly production requirements by varying workforce size (assuming opening workforce equal to first month's requirement). (ii) Produce to meet expected average demand by maintaining a constant workforce size (assuming the opening workforce is equal to the average workforce requirement during these six months). (iii) Compare the cost of above chase and level strategy and explain why the cost of stock- out is extremely difficult to estimate? (5 marks each part = 15 marks total) What are the two major differences between Aggregate planning in manufacturing and Aggregate planning in services? (5 marks) Discuss why Aggregate planning is related to human resource planning, budgeting, and marketing planning? (5 marks)
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