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A disk drive manufacturer is in need of an aggregate plan for July to December. The...

  1. A disk drive manufacturer is in need of an aggregate plan for July to December. The company has gathered the following data:

Month

Demand

Month

Demand

July

400

Oct

700

Aug

500

Nov

800

Sep

550

Dec

700

Item

Cost

Materials

$35/disk

Inventory

$8/disk/month

Subcontracting

$80/disk

Stock-out

$15/disk

Regular time labor

$12/hour

Overtime labor

$18/hour (above 8 hrs)

Hiring cost

$40/worker

Layoff cost

$80/worker

Other data include:

Item

Data

Current workforce (June)

8 people

Labor hours per disk

4 hrs

Workday per month

20 days

Beginning inventory

150 disk

Ending inventory requirement

0

  1. Prepare the aggregate plan for varying workforce, no subcontract, and no stock-out during December. Overtime limit is 20 hours per worker per month.

Month

Hired

Laid off

Workforce

Inventory

Production

July

Aug

Sep

Oct

Nov

Dec

b) How much is the total regular time cost?

c) The manufacturer decides to revise its plan and maintain its current workforce to produce the requirement. Overtime limit is still 20 hours per worker per month while ending inventory should be equal to the beginning inventory. Prepare the aggregate plan under the condition.

Month

Overtime

Inventory

Stockout

Subcontract

Production

July

Aug

Sep

Oct

Nov

Dec

d) Is the revised schedule better than the original plan? Why?

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