Question

You would like to construct an aggregate production plan for four quarters of 2021.

Product name: TRX3010

Cost of regular production = 50 $/u

Cost of overtime production = 65 $/u Inventory holding cost = 5 $/u/qtr

Cost of increasing production = 40 $/u Cost of decreasing production = 45 $/u Previous quarter's regular production = Beginning inventory level = 250 u

4200 u

The forecasted demand for the next four quarters are: 3700, 4000, 2600, and 3900 units.

PART B:

You want to set the quarterly regular production constant at 3200 units.

When needed, you will use overtime production.

You will keep inventory as low as possible but it must be at least 260 units per quarter. Stockouts are not allowed. In other words, quarterly demand must always be satisfied. You must perform all necessary calculation and summarize results in tabular form.

You must show clearly the regular production, overtime production, inventory, changes in regular production and costs. Briefly explanation is sufficent.

Answer 1

Solution :

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