How to develop an aggregate plan for product line, Operation Management

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DAT, Inc, company needs to develop an aggregate plan for its product line.

Relevant data are

Production time: 1 hour per unit

Average labor cost: $10/hour

Workweek: 5 days, 8 hours each day

Days per month: Assume 20 days per month

Beginning inventory: 500 units

Safety stock: one-half month

Carrying cost: $5 per unit per month

The forecast for the next year is:

Jan. Feb. Mar. Apr. May June July Aug Sep Oct Nov Dec

2500 3000 4000 3500 3500 3000 3000 4000 4000 4000 3000 3000

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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