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The planner for a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next six months. She
The planner for a company that makes garden tractors is about to prepare an aggregate production plan that will cover the next six months. She has collected the following information: Permaneat workforce =140 Production per month =2,800 units or 20 per worker Initial inventory =1,000 units Desired ending inventory at the end of sixth month =1,000 units Costs Labour Regulay time permaneat =$100 per tractor Overtime =$150 per tractor Temporary =5100 per tractor Hire cost =$500 per temporary worker or $25(=$500/20 units) per unit (charged to the first moath of employment); assume that temponary workers have the same productivity as permanent workers. Inventory =$10 per tractor per month (charged on the average inventory level) Back order =$150 per tractor per month The planner now wants to evaluate a production plan that calls for level outputworkforce (with the current level of permanent workforce, 140), using inventory to absorb the uneven forecast demand but allowing some back order
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