You would like to construct an aggregate production plan for product X341 for th
ID: 469802 • Letter: Y
Question
You would like to construct an aggregate production plan for product X341 for the next four quarters. Cost of regular production = 60 $/u cost of overtime production = 90 $/u inventory holding cost = 10 $/u/qtr cost of increasing production = 70 $/u cost of decreasing production = 120 $/u subcontracting cost = 115 $/u stockout cost = 130 $/u previous quarters regular output = 750 u beginning inventory level = 70 u the forecasted demand for the next four quarters are 500, 1000, 1100, and 1100 units. suppose that you want to set the quarterly regular production constant at 900 units and to use overtime if necessary. you do not want to use any subcontract. furthermore, you will keep inventory as low as possible. stockouts are not allowed. you must perform the calculation and answer the questions shown below. note: do not use any comma in your answers. the beginning inventory in quarter 2 is units. the overtime production in quarter 4 is units. total regular production is units. total overtime production is units. total regular production cost is $ total cost of increasing regular production is $ total cost of decreasing regular production is $ total cost of holding inventory is $ total cost of overtime production is $ total cost of production is $Explanation / Answer
Aggregate planning for next fours month is as follows:
QRT
Demand
Beginning Inventory
Regular Production
Overtime Production
Available units
Ending Inventory
Increase regular
Decrease regular
0
750
1
500
70
900
0
970
470
150
0
2
1000
470
900
0
1370
370
0
0
3
1100
370
900
0
1270
170
0
0
4
1100
170
900
30
1100
0
0
0
Total Units
3600
30
1010
150
0
Cost per unit
$60
$90
$10
$70
$120
Total Cost
$216,000
$2,700
$0
$10,100
$10,500
$0
Total Production Cost
$239,300
The beginning inventory in quarter 2 is 470 units.
The overtime production in quarter 4 is 30 units.
Total regular production is 3600 units.
Total overtime production is 30 units.
Total regular production cost is $60 x 3600 = $216,000
Total cost of increasing regular production is $70 x (900 – 750) = $10,500
Total cost of decreasing regular production is $0
Total cost of holding inventory is $10 x 1010 = $10,100
Total cost of overtime production is $90 x 30 = $2,700
Total cost of production is $239,300
QRT
Demand
Beginning Inventory
Regular Production
Overtime Production
Available units
Ending Inventory
Increase regular
Decrease regular
0
750
1
500
70
900
0
970
470
150
0
2
1000
470
900
0
1370
370
0
0
3
1100
370
900
0
1270
170
0
0
4
1100
170
900
30
1100
0
0
0
Total Units
3600
30
1010
150
0
Cost per unit
$60
$90
$10
$70
$120
Total Cost
$216,000
$2,700
$0
$10,100
$10,500
$0
Total Production Cost
$239,300
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