Question

ABC Manufacturing has the following Aggregate Plan demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 1500 units 1 1300 Beginning inventory 200 units 2 1400 Stockout cost $50 per unit 3 1500 Inventory holding cost $10 per unit at end of quarter 4 1300 Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit Overtime $10 extra per unit By utilizing the aggregate planning excel sheet, answer the following: a. Plan A - Chase demand by hiring and laying off. What is the total cost of the plan? [ Select ] b. Plan B - Mixed strategy producing at a constant rate of 1200 and obtaining the remainder from Overtime. What is the cost of this plan? [ Select ] c. Based on cost, what plan should be chosen?

please show all the work. thank you

Answer 1

Plan A - Chase demand by hiring and layoff

EXCEL FORMULA:

In the above Excel model, please read "Total Cost of Level Plan" as "Total Cost of Chase Plan"

---------------------------------------------------------------------------------------------------------------

Plan B - Mixed strategy

Excel formulas remain same part A

--------------------------------------------------------------------------------------------------

c)

We see that Plan B (Mixed strategy) gives a lower Total Cost

Therefore, based on cost, plan B should be chosen.