ASSIGMEENT ON AGGREGATE PLANNING

RGY manufactures a variety of jeans. A planner has developed an aggregate forecast for
demand for the next six months (quantities are in thousands, but use the values below for
computation purposes).

Month February March April May June July Total

Forecast 150 180 190 160 170 170

Additional information are as follow:

Regular production cost Php 300 per unit

Regular production capacity 150 units

Overtime production cost Php 350 per unit

Subcontracting cost Php 400 per unit

Holding cost Php 10

Backlog cost Php 450 per unit

Beginning inventory 0

Develop an aggregate plan using each of the following guidelines and compute the total cost of
each plan. Which plan has the lowest cost?

a. Use chase strategy. Supplement using overtime (maximum = 30 units) and subcontract
no limit, inventories not allowed.
b. Use level production. Supplement using inventory, overtime (maximum = 30 units),
subcon and backlogs are not allowed.

Strategy: For letter A

Month February March April May June July Total Cost/Unit T.

Units Cost
Forecast 150 180 190 160 170 170

Output

Regular

O/T

SC

Output-Fc

Inventory

Beginning

Ending

Ave.

Backlog

Strategy: For letter B

Month February March April May June July Total Cost/Unit T.

Units Cost

Forecast 100 140 150 110 125 120

Output

Regular

O/T

SC

Output-Fc

Inventory

Beginning

Ending

Ave.
Backlog