Question

You would like to construct an aggregate production plan for product CT34 for the four quarters...

You would like to construct an aggregate production plan for product CT34 for the four quarters of next year. Cost of regular production = 70 $/u Cost of overtime production = 95 $/u Inventory holding cost = 7 $/u/qtr Cost of increasing production = 80 $/u Cost of decreasing production = 110 $/u The regular production for the last quarter of this year = 1900 u Inventory level at the end of the last quarter of this year = 140 u The forecasted demand for the four quarters of next year are: 2600, 2800, 2200, and 1800 units. You want to use the chase production strategy without overtime production. Furthermore, you will keep inventory as low as possible. Stockouts (shortages) are not allowed. Construct a spreadsheet showing the production plan for next year. Calculate all related costs for the plan.

Homework Answers

Answer #1

Production Plan to Produce CT34 using Chase strategy

Quarters I II III IV Total
Demand (units) 2600 2800 2200 1800 9400
Inventory at Beginning (units) 140 0 0 0 140
Quantities to be manufactured (units) 2460 2800 2200 1800 9260
Inventory at end (units) 0 0 0 0 0
Inventory Holding Cost =140 units*$7=$980 0 0 0 $980
Manufacturing cost =1900 units*$70+560 units*$80=$177800 =2460units*$70+340units*$80=$199400 =2200*80=$176000 =1800*80=$144000 $519400
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