3. Use the information in Q2. Complete an aggregate plan by considering all of t

Question

3. Use the information in Q2. Complete an aggregate plan by considering all of the following conditions: A constant workforce of eight workers. Each worker will work at the full capacity Unused product will be used to fulfill demand of the following month Overtime production, Overtime production is planned as needed. Each worker can work as many as 40 hours during overtime per month based on the regulation, though. Subcontract. If demand is stronger than the regular time production and maximum overtime production, purchase the products from the subcontractor in order to fulfill all demand No stockout is allowed

Explanation / Answer

Regular time production:

8 workers work 8 hours for 20 days, total hours for regular time = 8*8*20 = 1280

it takes 4 hours to make 1 disk, total regular time capacity = 1280/4 = 320 disks per month

Overtime hours allowed = 40/worker

overtime total hours = 8*40 = 320

overtime capacity = 320/4 = 80 disks per month

The above table shows the regular time production per month, overtime production per month and the rest of required production is covered by subcontracting.

Starting inventory for July is 150, which is utilized in July.

Cost of this plan:

regular time = total hours*12*6 months = 1280*12*6 = 92160

overtime cost = total production*hours required to produce 1 disk*18 = 430*4*18 = 30960

Subcontract cost = units*80 = 1350*80 = 108000

inventory cost is zero since no inventory for any month.

Total cost = 92160 + 30960 + 108000 = 231120

Month Demand Regular production Overtime Subcontract Ending inventory 150 July 500 320 30 0 0 August 600 320 80 200 0 September 550 320 80 150 0 October 600 320 80 200 0 November 900 320 80 500 0 December 700 320 80 300 0 Total 3850 1920 430 1350 0

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