Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop its aggregate schedule. The cost accounting department has supplied you the costs relevant to the aggregate plan, and the marketing department has provided a four-quarter forecast. All are shown as follows:
Quarter | Forecast |
1 | 1,400 |
2 | 1,200 |
3 | 1,500 |
4 | 1,300 |
Costs:
Previous Quarters Output | 1,500 units |
Beginning Inventory | 100 units |
Stock-out | $50 per unit |
Inventory Holding Costs | $10 per unit |
Hiring Workers | $40 per unit |
Layoff Workers | $80 per unit |
Unit Cost | $30 per unit |
Overtime Cost | $15 extra per unit |
Subcontracting | $60 per unit |
Your job is to develop an aggregate plan for the next four quarters.
Plan A - First, try hiring and layoffs based on the prior quarter (to meet the forecast) as necessary. What is the cost of this plan? $ [ Select ] ["215,900", "220,500", "178,000", "214,000"]
Plan B - Then try a plan that holds employment steady. What is the cost of this plan? $ [ Select ] ["178,000", "169,500", "195,600", "212,225"]
Plan A
Result:
Quarter | Forecast | Output | Hire | Layoff |
1,500 | ||||
1 | 1,400 | 1,400 | 0 | 100 |
2 | 1,200 | 1,200 | 0 | 200 |
3 | 1,500 | 1,500 | 300 | 0 |
4 | 1,300 | 1,300 | 0 | 200 |
Totals | 5,400 | 300 | 500 | |
Cost/ unit | $30 | $40 | $80 | |
Costs | $162,000 | $12,000 | $40,000 | |
$214,000 |
Plan B
Quarter | Forecast | Output | Hire | Layoff | Ending inventory |
1,500 | 100 | ||||
1 | 1,400 | 1,350 | 0 | 150 | 50 |
2 | 1,200 | 1,350 | 0 | 0 | 200 |
3 | 1,500 | 1,350 | 0 | 0 | 50 |
4 | 1,300 | 1,350 | 0 | 0 | 100 |
Totals | 5,400 | 0 | 150 | 400 | |
Cost/ unit | $30 | $40 | $80 | $10 | |
Costs | $162,000 | $0 | $12,000 | $4,000 | |
$178,000 |
Plan C
Quarter | Forecast | Regular output | Hire | Layoff | Overtime output | Subcontracted output |
1,500 | ||||||
1 | 1,400 | 900 | 0 | 600 | 200 | 200 |
2 | 1,200 | 900 | 0 | 0 | 200 | 100 |
3 | 1,500 | 900 | 0 | 0 | 200 | 400 |
4 | 1,300 | 900 | 0 | 0 | 200 | 200 |
Totals | 3,600 | 0 | 600 | 800 | 900 | |
Cost/ unit | $30 | $40 | $80 | $45 | $60 | |
Costs | $108,000 | $0 | $48,000 | $36,000 | $54,000 | |
$246,000 |
Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop...
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