Labor cost for level capacity aggregate planning strategy

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Reference no: EM131275695

A small manufacturing plant is considering their aggregate plan for the next fiscal year. They are limited to a maximum number of 32 FTEs each quarter. Their forecasted demand for next year is: Quarter 1 2 3 4 Demand 12000 14200 15400 13200 They do not consider hiring or firing costs but have the following production parameters.

Labor Standard = 1.3 hours/item

Regular Time Labor Cost = $22/hour

Beginning Annual Inventory Level = 1000

Ending Annual Inventory Level = 1000 Unit

Inventory Carrying Cost = $4/item/quarter

Any overtime labor in a quarter is time and a half. (Assume 40 hours/week, 52 weeks/year, and 4 quarters/year.)

1. For next fiscal year, find their annual regular time direct labor cost and overtime direct labor cost for a level capacity aggregate planning strategy.

2. For next fiscal year, find their annual regular time direct labor cost and overtime direct labor cost for a chase demand aggregate planning strategy.

Reference no: EM131275695

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