Question 1. Aggregate Planning (25 marks) Mis a company that produces handbags. The company is trying to develop an aggregate plan for the next 6 months. The demand forecast, number of working days for each month, and cost information are as follows: Jul Aug Sep Oct Nov Dec Demand forecast 1200 900 1000 700 800 1550 Number of working days 21 23 22 21 22 20 Material $50 per unit $6 per hour Straight time Overtime $9 per hour $90 per worker Hiring Layoff $180 per worker Inventory holding $5 per unit per month per unit per month $10 Backorder Subcontracting $75 per unit . . At the beginning of July, there are 100 units of initial inventory and 10 workers. Besides, the following assumptions are made: The productivity is 0.5 unit per hour, with 8 hours per day; Round up "Number of workers" to the next whole number; Once scheduled, all workers will produce at their full potential each month; Inventory holding cost and backorder cost are calculated based on the ending inventory of each month; Hiring cost or layoff cost is incurred when the total number of workers changes. Questions: . (i) Use the following strategies to develop aggregate plan in the subsequent three tables respectively. Plan A: Pure chase strategy. (7 marks) Plan B: Pure level strategy. (7 marks) Plan C: A constant workforce of 9 workers; use overtime to fulfil extra demands in July, August, and September; and use subcontracting to fulfil extra demands in October, November, and December. (10 marks) (ii) Find out the strategy with the least total costs. (1 mark) . Plan A: Pure chase strategy. Jul Aug Oct Nov Dec Total Sep 1000 Demand forecast 1200 900 700 800 1550 6150 21 23 22 21 22 20 129 Working days (per month) Aggregate Plan Beginning inventory Production required Production hours required Number of workers Workers hired Workers laid off Units produced-regular Units produced-overtime Units subcontracted Ending inventory Cost Material Straight time Overtime Hiring Layoff Inventory holding Backorder Subcontracting Total: Plan B: Pure level strategy. Jul Aug Sep Oct Nov Dec Total Demand forecast 1200 900 1000 700 800 1550 6150 21 23 22 21 22 20 129 Working days (per month) Aggregate Plan Beginning inventory Production required Production hours required Number of workers --- Workers hired Workers laid off Units produced-regular Units produced-overtime Units subcontracted Ending inventory --- Cost Material Straight time Overtime Hiring Layoff Inventory holding Backorder Subcontracting Total: Plan C: Constant workforce with overtime in the first 3 months and subcontracting in the last 3 months. Jul Aug Sep Oct Nov Dec Total Demand forecast 1200 900 1000 700 800 1550 6150 21 23 22 21 22 20 129 Working days (per month) Aggregate Plan Beginning inventory Production required Production hours required Number of workers Workers hired Workers laid off Units produced-regular Units produced-overtime Units subcontracted Ending inventory Cost Material Straight time Overtime Hiring Layoff Page 4 of 11 Inventory holding Backorder Subcontracting Total
