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You are required to develop an aggregate plan for a new product. The four-quarter forecast data and the relevant information is provided as following: Quarter
- You are required to develop an aggregate plan for a new product. The four-quarter forecast data and the relevant information is provided as following: Quarter Forecast 1 1,400 2 1,200 3 1,500 4 1,300 Previous quarter’s output 1,500 units Beginning inventory 0 units Stockout cost for backordering $50 per unit Inventory holding cost $10 per unit for every unit held at the end of the quarter Hiring cost $40 per unit Layoff cost $80 per unit Unit cost $30 per unit Overtime $15 extra per unit Subcontracting Not available Your job is to develop an aggregate plan for the next four quarters. a) Firstly, try hiring and layoff. b) Try a plan that hold employment steady. c) Which is the most economical plan? d) Discuss the implications of adopting option a) and b)
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