In: Advanced Math
Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a regular output capacity of 130 engines per month. Regular output has a cost of $60 per engine. The beginning inventory is zero engines. Overtime has a cost of $90 per engine.
MONTH |
||||||||
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
Total |
120 |
135 |
140 |
120 |
125 |
125 |
140 |
135 |
1,040 |
a. |
Develop a chase plan that matches the forecast and compute the total cost of your plan. Regular production can be less than regular capacity. |
b. |
Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is $2 per engine per month. Backlog cost is $90 per engine per month. There should not be a backlog in the last month. |