Reference no: EM13215580
Old Pueblo Engineering Contractors creates six-month "rolling" schedules, which are recomputed monthly. For competitive reasons (they would need to divulge proprietary design criteria, methods, and so on), Old Pueblo does not subcontract. Therefore, its only options to meet customer requirements are (1) work on regular time; (2) work on overtime, which is limited to 30 percent of regular time; (3) do customers' work early, which would cost an additional $5 per hour per month; and (4) perform customers' work late, which would cost an additional $10 per hour per month penalty, as provided by their contract.
Old Pueblo has 25 engineers on its staff at an hourly rate of $30. The overtime rate is $45. Customers' hourly requirements for the six months from January to June are
JANUARY FEBRUARY MARCH APRIL MAY JUNE
5,000 4,000 6,000 6,000 5,000 4,000
________________________________________
Develop an aggregate plan. Assume 20 working days in each month. (Hint: Assume no backordered work at the end of the plan.)
January February March April May June
Forecast work hours 5,000 4,000 6,000 6,000 5,000 4,000
Beginning inventory (work done earlier)
Work hours required
Regular work hours available
Overtime hours
Total planned hours
Ending inventory (early work completed)
Ending backorders (work to be done later)
________________________________________
January February March April May June
Straight time $
$
$
$
$
$
Overtime
Inventory
Backorder
________________________________________
________________________________________
Total $
$
$
$
$
$
________________________________________
$
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