Aggregate Production Planning - Graduate Level
A manager is attempting to put together an aggregate plan for the coming nine months. She has obtained a forecast of expected demand for the planning horizon. The plan must deal with highly seasonal demand; demand is relatively high in periods 3 and 4 and again in period 8, as can be seen from the attached forecasts.
The department now has 20 full-time employees, each of whom can produce 10 units of output per period at a cost of $6 per unit. Inventory carrying cost is $5 per unit per period, and backlog (back order) cost is $10 per unit per period. The manager is considering a plan that would involve hiring two people to start working in period 1, one on a temporary basis who would work only through period 5. This would cost $500 in addition to unit production costs.
Determine the total cost of the plan, including production, inventory, and back order costs.
The solution explains how to create an aggregate production plan given the constraints
- Plain text response
- Attached file(s):
- aggregate production planning.xls
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