Develop an aggregate plan for the next four quarters

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Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop its aggregate schedule. The cost accounting department has supplied you the costs relevant to the aggregate plan, and the marketing department has provided a four-quarter forecast. All are shown as follows:

QUARTER

FORECAST

1

1,400

2

1,200

3

1,500

4

1,300

COSTS

Previous quarter's output

1,500 units

Beginning inventory

0 units

Stockout cost for backorders

$50 per unit

Inventory holding cost

$10 per unit for every unit held at the end of the quarter

Hiring workers

$40 per unit

Layoff workers

$80 per unit

Unit cost

$30 per unit

Overtime

$15 extra per unit

Subcontracting

Not available

Your job is to develop an aggregate plan for the next four quarters.

a) First, try a chase plan by hiring and layoffs (to meet the forecast) as necessary.

b) Then try a plan that holds employment steady.

c) Which is the more economical plan for Deb Bishop Health and Beauty Products?

Reference no: EM131359195

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