Week 4 Exercise (Sales & Operations planning) for 3% of the total grade

A small company produces a variety of recreational and leisure vehicles. The sales & marketing manager has developed the following aggregate forecasts:

Month		Mar	Apr	May	Jun	Jul	Aug	Sep
Forecast		50	44	55	80	70	40	50

Use the following information:

Regular labor cost $240 per unit

Overtime labor cost $360 per unit

Subcontracting cost $400 per unit

Regular capacity 50 units per month

Overtime capacity 8 units per month

Holding cost $30 per unit per month

Beginning inventory 0 units

Desired ending inventory

(at the end of September) 0 units

Develop the minimum cost aggregate production plan and compute its total cost using the Excel Solver.

Assume that:

>> No hires and no layoffs are allowed.

>> The company does not want to have any shortage at the end of any month.

>> It is possible to go idle and as a result, not produce at the full regular capacity of 50 units per month if the full capacity is not needed in that particular month (to possibly reduce the inventory holding costs if it were less costly in total to do so).