Mixed strategy where workforce is maintained

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Reference no: EM132232855

1. Acme Inc. uses aggregate planning to set labor and inventory levels for the year. Part Y has a seasonal demand pattern. A production worker, on average, can produce 1,000 parts in one month at the cost of $ 9 per unit during regular production hours. To use overtime, the cost increases to $10 per item. Item can also be purchased from an outside supplier at $12 each. Inventory carrying costs are $2 per item per month, overtime is limited to regular production, but subcontracting is unlimited. There are currently 25 workers. Given the forecast is shown below:

a. A six-month aggregate production plan using a chase demand concept, no OT or subcontracting can be used.

b. A mixed strategy where the workforce is maintained for April through August and supplemented with ovetime and subcontracting as needed.

c. Show the cost of the strategy

Month Demand

April 60,000

May 22,000

June 15,000

July 46,000

August 80,000

September 15,000

Reference no: EM132232855

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