DAT, Inc., needs to develop an aggregate plan for its product line. Relevant data are :
Production time – 1 hour per unit
Beginning inventory – 500 units
Average labor cost – $10 per hour
Safety stock – one-half month
workweek – 5 days, 8 hours each day
shortage cost – $20 per unit per month
days per month – assume 20 workdays per month
carrying cost – $5 per unit per month
The forecast for next year is :
January – 2,500 …
February – 3,000 …
March – 4,000 …
April – 3,500 …
May – 3,500 …
June – 3,000 …
July – 3,000 …
August – 4,000 …
September – 4,000 …
October – 4,000 …
November – 3,000 …
December – 3,000
Management prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages.
Demand not met is carried over to the following month.
Develop an aggregate plan that will meet the demand and other conditions of the problem.
Do not try to find the optimum ; just find a good solution and state the procedure you might use to test for a better solution.
Make any necessary assumptions.
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