Question
You would like to construct an aggregate production plan for product CT34 for the four quarters of next year. Cost of regular production = 70
You would like to construct an aggregate production plan for product CT34 for the four quarters of next year. Cost of regular production = 70 $/u Cost of overtime production = 95 $/u Inventory holding cost = 7 $/u/qtr Cost of increasing production = 80 $/u Cost of decreasing production = 110 $/u The regular production for the last quarter of this year = 1900 u Inventory level at the end of the last quarter of this year = 140 u The forecasted demand for the four quarters of next year are: 2600, 2800, 2200, and 1800 units. You want to use the chase production strategy without overtime production. Furthermore, you will keep inventory as low as possible. Stockouts (shortages) are not allowed. Construct a spreadsheet showing the production plan for next year. Calculate all related costs for the plan.
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