The V.P of Marketing is not all that happy with the large volume of backorders in your plan from question 1A . She asks that you develop a plan that results in no backorders at any time during the year. The V.P. of manufacturing says that he will insist that any such plan specify level output each quarter. The V.P. of Finance states that you no longer need to have a Qtr. IV ending inventory of 2000 units. Using the original forecast data, beginning inventory, starting number of full time employees, etc. from problem 1, develop a plan that will meet the requirements of all three V.P.'s.

On Dec. 22 the V.P. Finance informs you that the availability of capital will be extremely tight next year. As a consequence, he asks you to develop a radically different type of aggregate plan based on a "Chase" strategy. Ending inventory and backorders is to be zero at the end of each quarter. The V.P. Manufacturing says he realizes this type of strategy will require him to abandon his beloved "level" strategy and for you to vary the total output rate from one quarter to another. The productivity planning factors for each type of output are repeated here (note that there are some limits in a couple of the categories). Option Full-Time Employees Overtime (FTE) Subcontract Part-time Workers Productivity 500 units/worker/qtr Up to 200 units/worker/qtr 400 units/worker/qtr Limitations Up to 5200 units/qtr Up to 25 workers/qtr Finally, the Personnel Manager informs you that, due to end of the year retirements, only 32 (not 45) full- time employees will be on the payroll as of the beginning of Qtr. 1. These retirements will occur at the end of the prior year. As such, you do not show a layoff adjustment at the start of Qtr. 1. Using the original forecasts and beginning inventory information for problem 1, develop a "chase" plan, following the guidelines noted above.

Please answer both questions using this chart for each problem.

AGGREGATE PLANNING WORKSHEET Period Forecast Output Total Inventory: Beginnning Ending Average Backorders: Plan for types of outputs FT hires/layoffs at start of quarter FT staffing starting Regular output/person/qtr Overtime output/person/qtr Temp hires/layoffs at start of quarter Temporary staff starting Temp output/person/qtr Sub-contr (5200/qtr max) 500 200 400 Check total output Sum light gray lines Costs Output costs for FT staff Regular ($/unit) 5.00 Overtime ($/unit) 7.50 Temp ($/unit) 12.00 Sub-Contr ($/unit) 10.00 Hiring costs ($/person) 100 Layoff costs ($/FT person) 500 Inventory costs $/qtr-avg inv 4.00 Backorder costs $/qtr 8.00 Totals I II III IV Total