Question

Nowjuice, Inc., produces bottled pomegranate juice. A planner has developed an aggregate forecast for demand for the next six months.

Month             May                Jun                  jul                    Aug                 Sep                  oct

Forecast           4000                4800                5600                7200                6400                5000

Use the following information to develop aggregate plans.

Regular production cost          $ 10 per case

Regular production capacity   5000 cases

Overtime production cost       $ 16 per case

Subcontracting cost                $ 20 per case

Inventory cost                         $ 1 per case per month

Beginning inventory               0

1. Develop an aggregate plan using each of the following guidelines and compute the total cost for your plan. Use a combination of overtime (500 cases per period max. and min.) and subcontracting (500 cases per period maximum and 200 minimum) to handle variation in demand.
2. Repeat the plan if the company wants to follow a chase strategy.

Answer 1

Period 1 2 3 4 5 6 Total Forecast 4,000 4.800 5,600 7,200 6,400 5,000 33.000 Output Regular 5,000 5,000 5,000 5.000 5,000 5,000 30,000 Overtime 1,600 1,400 3,000 Forecast 1,000 200 -600 -600 0 0 0 Inventory Beginning 1,000 1,200 600 0 0 Ending 1.000 1,200 600 0 0 0 Average 500 1,100.00 900 300 0 0 2.800 Backlog 0 0 0 0 0 0 0 Costs: Regular 10 50.000 50.000 50.000 50.000 50.000 50.000 300.000 Overtime 16 0 0 0 25,600 22.400 0 48.000 Inventory 500 1,100 900 300 0 0 2.800 Back orders 10 0 0 0 0 0 0 0 Total 50,500 51,100 50,900 75,900 | 72,400 50,000 350,800

b) 1 4,000 2 4.800 3 5.600 4 7,200 5 6 6,400 5,000 Total 33,000 Period Forecast Output Regular Overtime Subcontract Output - Forecast 5.000 500 5,000 500 5.000 500 5.000 500 5,000 5,000 500 500 30,000 2,500 500 1,500 700 -100 -1,700 -400 0 0 Beginning Ending Average Backlog 1,500 750 0 2.100 400 1.250.00 0 400 0 200 0 0 0 0 0 6,200 0 Inventory 1,500 2,200 2.200 2.100 1.850.00 2.150.00 0 0 Costs 50.000 50.000 8.000 8.000 0 0 1.850 2.150 Regular 10 Overtime 16 Subcontract 20 Inventory Back 10 orders Total 50,000 8.000 0 750 50.000 8,000 0 1.250 0 50.000 8.000 10,000 200 50,000 0 0 0 300,000 40,000 10,000 6,200 1 0 0 0 0 0 0 58,750 59,850 60,150 59,250 68,200 50,000 356,200