You are the operations manager for an OEM manufacturing plant that produces YBOX game consoles.
Based on the sales record from 2010, the marketing manager forecasts the demand for January-June of 2011 as the following:
	January	February	March	April	May	June
	2,500	3,000	4,000	3,500	3,500	3,000
Relevant information includes:
Production Time			1 hour per unit
Average labor cost			$10 per hour
Workweek			5 days, 8 hours per day
Days per month			20 work days per month
Beginning inventory			500 units
Safety stock			One-half month
Shortage cost			$20 per unit per month
Carrying cost			$5 per unit per month
As the operations manager, you prefer to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages.
Demand not met is carried over to the following month. You currently have 21 workers.
a. Which aggregate plan will you use to produce the forecasted demand for YBOX game consoles?						Level stategy
b. What is the total cost for the chosen plan?
Given
Time Period	January	February	March	April	May	June
Demand Forecast
Number of Working Days per Month
Costs
Materials	XXX	$ per unit
Inventory holding cost	$5.00	$ per unit per month
Shortage costs	$20.00	$ per unit per month
Hiring and training cost	$0.00	$ per worker
Layoff cost	$0.00	$ per worker
Production time	1.0	hrs per unit
Straight time labor cost	$10.00	$ per hour
Overtime labor cost	$0.00	$ per hour
Working time (hrs/day)	8.00	hrs per day
Beginning inventory	500	units
Aggregate Production Planning Requirements (??% Safety Stock)
Time Period	January	February	March	April	May	June
Beginning Inventory
Demand Forecast
Safety Stock (% x Demand forecast)
Production Requirement (Demand forecast + Safety stock - Beginning inventory)
Ending Inventory (Beginning inventory + Production requirement - Demand forecast)
Time Period	January	February	March	April	May	June	Total
Beginning Inventory
Working Days per month
Production Hours Available (Working days per month x hrs/day x # of workers) ?? workers*
Actual Production (Production hrs available / Labor hrs required per unit)
Demand forecast
Ending Inventory (Beginning inventory + Actual production - Demand forecast)
Units Short (Absolute value of a negative ending inventory)
Shortage Cost (Units short x Cost of stockout)
Safety Stock
Units Excess (Ending inventory - Safety stock) only if positive amount
Inventory Cost (Units excess x Inventory holding cost)
Straight Time Cost (Production hrs available x Straight time labor cost)
*(Sum of Production Requirement in Page 1 x 1 hr./unit)/(Sum of Production Hours Available x 8 hr./day) = (20,500 x 1)/(120 x 8) = 21					Total Cost