Exercise 2

Company X currently has 150 workers. Company has to work 20 working days per month and 8 hour per day. Each worker can produce 70 units per period.

There are associated costs for
Spare transport that is not used	2	$/unit
Shortage of transport	50	$/unit
Cost of moving to this function from other jobs	300	$/employee
Cost of moving an employee from this function to other jobs	500	$/employee
Number of employee	150	Employees
Number of unit per employee	70	Units
Regular-time cost of employee	4	$/hour

The company is confusing between two strategies for their aggregate planning as following:

Strategy 1: level strategy

Month	1	2	3	4	5	6	Total
Forecasting demand	10000	11000	15000	18000	25000	26000	105000
Cummulative forecast demand
Supply rate
Cummulative supply
Unused supply
Shortage of supply
Cost of unsed supply
Cost of shortage
Number of employee
Cost of moving employees
Regular-time cost of employees
Total cost

Strategy 2: Chase strategy

Finish aggregate planning for the company. Which strategy is the best for company? Explain for your suggestions.