Question
Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine
Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a regular output capacity of 135 engines per month. Regular output has a cost of $60 per engine. The beginning inventory is zero engines. Overtime has a cost of $100 per engine.
| Month | |||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total | |
| Forecast | 120 | 135 | 140 | 120 | 125 | 125 | 140 | 135 | 1,040 |
a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Regular production can be less than regular capacity. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.)
| Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total |
| Forecast | 120 | 135 | 140 | 120 | 125 | 125 | 140 | 135 | 1040 |
| Output | - | - | - | ||||||
| Regular | |||||||||
| Overtime | |||||||||
| Output Forecast | |||||||||
| Costs | - | - | - | - | - | - | |||
| Output | - | - | - | - | - | - | |||
| Regular | |||||||||
| Overtime | |||||||||
| Total |
b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is $2 per engine per month. Backlog cost is $120 per engine per month. There should not be a backlog in the last month. Set regular production equal to the monthly average of total forecasted demand. Assume that using overtime is not an option. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Round average inventory row, Inventory cost row, and Total row values to 1 decimal.)
| Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total |
| Forecast | 120 | 135 | 140 | 120 | 125 | 125 | 140 | 135 | 1040 |
| Output | - | - | - | - | - | ||||
| Regular | |||||||||
| Output-Forcast | - | ||||||||
| Inventory | - | - | - | - | - | - | - | - | |
| Beginning | |||||||||
| Ending | |||||||||
| Average | |||||||||
| Backlog | |||||||||
| Costs | |||||||||
| output | |||||||||
| Regular | |||||||||
| Inventory | |||||||||
| Back order | |||||||||
| Total |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Investing Amid Low Expected Returns Making The Most When Markets Offer The Least
Authors: Antti Ilmanen
1st Edition
1119860199, 978-1119860198
