Aggregate Planning Given the projected demands for the next six months, prepare
ID: 2475864 • Letter: A
Question
Aggregate Planning
Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 150 units per month (Cost per Unit = $30 ). Overtime is limited to a maximum of 20 units per month (Cost per Unit =$45). Units purchased from the subcontractor (Cost per Unit = $54 ) cannot exceed 70 per month and the total purchases from the subcontractor over the 6 month period cannot be over 220 units. Backorders cannot exceed 60 units in any given month (Cost per Unit = $5 ) and must be no more than 10 in Period 6. Average Inventory Holding cost per Unit = $10. Forecasted Demand as well as Beginning and desired Ending Inventory are listed in the table below.
Month
1
2
3
4
5
6
Total
Regular Output
Overtime Output
Subcontract
Beginning Inventory
20
Total Available for Sale
Less Forecast
190
170
270
180
160
190
Plus Backlog-Current Period
Less Backlog-Previous Period
Ending Inventory
10
Average Inventory
Hint: Range (38480 ,40180 )
Answer Format: No Dollar ($) signs or commas --- Answers should be whole numbers.
Month
1
2
3
4
5
6
Total
Regular Output
Overtime Output
Subcontract
Beginning Inventory
20
Total Available for Sale
Less Forecast
190
170
270
180
160
190
Plus Backlog-Current Period
Less Backlog-Previous Period
Ending Inventory
10
Average Inventory
Explanation / Answer
Period 1 2 3 4 5 6 Total Forecast 190 170 270 180 160 190 1,160 Output Regular 150 150 150 150 150 150 900 Overtime 20 20 20 20 10 20 110 Subcontract - - 70 40 - 20 130 Output Forecast 170 170 240 210 160 190 1,140 Inventory Beginning 20 - - - - - 20 Ending - - - - - - - Average 10 - - - - - 10 Backlog - - 30 - - - 30 Costs: Regular @ 30 4,500 4,500 4,500 4,500 4,500 4,500 27,000 Overtime @ 45 900 900 900 900 450 900 4,950 Subcontract @ 54 - - 3,780 2,160 - 1,080 7,020 Inventory @ 10 100 - - - - - 100 Backorders @ 5 - - 150 - - - 150 Total 5,500 5,400 9,330 7,560 4,950 6,480 39,220