Refer to Example 1. The president of the firm has decided to shut down the plant for vacation and installation of new equipment in period 4. After installation, the cost per unit will remain the same, but the output rate for regular time will be 450. Regular output is the same as in Example 1 for periods 1, 2, and 3; 0 for period 4; and 450 for each of the remaining periods. Note, though, that the forecast of 400 units in period 4 must be dealt with. Prepare the aggregate plan, and compute its total cost.

Question

Aaron Donovan

Business

19 August, 04:07

Refer to Example 1. The president of the firm has decided to shut down the plant for vacation and installation of new equipment in period 4. After installation, the cost per unit will remain the same, but the output rate for regular time will be 450. Regular output is the same as in Example 1 for periods 1, 2, and 3; 0 for period 4; and 450 for each of the remaining periods. Note, though, that the forecast of 400 units in period 4 must be dealt with. Prepare the aggregate plan, and compute its total cost.

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Jeffrey Adams · Answer 1

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Explanation:

The aggregate plan is prepared below;

Period 1 2 3 4 5 6

Forecast 200 200 300 400 500 200

Output

Regular 300 300 300 0 450 450

Overtime

Subcontract

Output

Forecast 100 100 0 400 50 25

Inventory

Beginning 0 100 200 200 0 0

Ending 100 200 200 0 0 0

Average 50 150 200 100 0 0

Backlog 0 0 0 200 250 0

Costs

Output

Regular 600 600 600 0 900 900

Overtime

Subcontract

Inventory 50 150 200 100 0 0

Backorder at5 0 0 0 1,000 1,250 0

Total 650 750 800 1,100 2,150 900