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.