Q2) A producer of engines for lawn mowers and leaf blowers must develop
an
aggregate plan given the forecast for engine demand shown in the table.
The
company has a normal capacity of 130 engines per month. Normal output
has
a cost of $60 per engine. The beginning inventory is zero engines.
Overtime
has a cost of $90 per engine.
a. Develop a chase plan that matches the forecast (using overtime and
slack
time) and compute the total cost of your plan.
b. Develop a level output plan that uses inventory to absorb
fluctuations.
Inventory carrying cost is $2 per engine per month. Backing cost is $90
per engine per month. Compute its total cost and compare with part a.
Month 1 2 3 4 5 6 7 8 Total
Forecast 120 135 140 120 125 125 140 135 1040
Answer
Question 2
a) Chase Plan
120 x 60 7200
130 x 60 + 5 x 90 8250
130 x 60 + 10 x 90 8700
120 x 60 7200
125 x 60 7500
125 x 60 7500
130 x 60 + 10 x 90 8700
130 x 60 + 5 x 90 8250
Total Cost $63300
b) Level Plan
130 x 60 + 2 x 10 7820
130 x 60 + 2 x 5 7810
130 x 60 + 5 x 90 8250
130 x 60 + 2 x 5 7810
130 x 60 + 2 x 10 7820
130 x 60 + 2 x 15 7830
130 x 60 + 2 x 5 7810
130 x 60 7800
Total Cost $62950
Level Cost is better by $350
Business Homework Solutions
#45637
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(See attachment for full problem)
Q2) A producer of engines for lawn mowers and leaf blowers must develop an
aggregate plan given the forecast for engine demand shown in the table. The
company has a normal capacity of 130 engines per month. Normal output has
a cost of $60 per engine. The beginning inventory is zero engines. Overtime
has a cost of $90 per engine.
a. Develop a chase plan that matches the forecast (using overtime and slack
time) and compute the total cost of your plan.
b. Develop a level output plan that uses inventory to absorb fluctuations.
Inventory carrying cost is $2 per engine per month. Backing cost is $90
per engine per month. Compute its total cost and compare with part a.
Month 1 2 3 4 5 6 7 8 Total
Forecast 120 135 140 120 125 125 140 135 1040
The solution shows a level output and a chase plan and the total cost of the two plans
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