Cost data

Regular time labor cost per hour $10

Overtime time labor cost per hour $15

Subcontracting cost per unit (labor only) $80

Back order cost per unit per period $20

Inventory holding cost per unit per period $10

Hiring cost per employee $500

Firing cost per employee $400

Capacity data

Beginning workforce 40 employees

Beginning inventory 0 units

Beginning back orders 0 units

Production standard per unit (hours) 2 hours of labor per unit

Regular time available per period (hours) 160 hours per period per employee

Overtime time available per period (hours) 30 hours per period per employee

Demand data

Period 1 3,920 units Period 5 3,800 units

Period 2 2,480 units Period 6 4,340 units

Period 3 2,200 units Period 7 4,820 units

Period 4 3,280 units Period 8 4,600 units

Develop a level aggregate plan using inventory and back orders (data given above).

(a) What is the production rate per period?

(b) No overtime is to be used. What is the required workforce level and how many workers are hired or fired at the beginning of period 1?

(c) What is the maximum ending inventory and when does it occur?

(d) What is the maximum amount of back orders and when does it occur?

(e) What is the total cost?

(f) What is the cost per unit?

Develop a chase aggregate plan without inventory and back orders. Do no hiring or firing. When demand exceeds regular production, use overtime up to its maximum and then subcontracting. When demand is less than regular production, use undertime (data given above).

(a) What are the total hours of overtime per employee for the plan?

(b) How many total units are produced using subcontracting?

(c) What are the total hours of undertime per employee for the plan?

(d) What is the total cost?

(e) What is the cost per unit?

Develop a chase aggregate plan without inventory and back orders. Use no undertime or subcontracting. When demand exceeds regular plus maximum overtime production, hire enough employees to meet demand, working as much overtime as possible. When demand is less than regular time production, fire just enough workers to avoid undertime (you may then use a minimal amount of overtime to get production back up to demand) (data given above).

What is the workforce at the end of the last period?

How many total were hired? How many total were fired?

(b) How many total units were produced using overtime?

(c) What is the total cost?

(d) What is the cost per unit?

Develop a hybrid aggregate plan with inventory, but no back orders. Also, use no undertime and no subcontracting. Also use no firing, since the company is projecting a 20% annual growth rate per year over the next several years. When demand minus opening inventory exceeds regular plus maximum overtime production, hire enough employees to meet demand, working as much overtime as possible. When demand is less than regular time production, work no overtime and add to inventory (data given above).

What is the workforce at the end of the last period?

How many total were hired?

(b) How many total units were produced using overtime?

(c) What is the maximum ending inventory and when does it occur?

(d) What is the total cost?

(e) What is the cost per unit?