Name: Carino, Patricia Andrea

Section: A-334

ASSIGNMENT ON AGGREGATE PLANNING

FGM CO. has developed the forecast shown below.  A planner has developed an aggregate
forecast for demand for the next seven months (quantities are in thousands, but use the values
below for computation purposes).
 

Month February March April May June July August total

Forecast 250 300 250 300 280 275 270 1925

 
     Additional information are as follow:
 
Regular production cost                      $ 40 per unit
Regular production capacity               275 units except for 7th month which is 250 units
Overtime production cost                   $ 60 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?

1. Use chase strategy that matches the forecast and compute the total cost of your plan.
Overtime Cost =$ 60/unit.
2. Would the total cost be less with regular production with no overtime, but using a
subcontractor to handle the excess above normal capacity at a cost of $50 per hundred
bolts? Backlogs are not allowed. The inventory carrying costs is $2 per hundred bolts.
 Name: Carino, Patricia Andrea
Section: A-334
Strategy/Plan: For letter A               
February March April May June July August Total Cost/Unit T.
Period Cost
Forecast 250 300 250 300 280 275 270 1925    
Output                    
Regular 250 275 250 275 275 275 250 1850 40 74000
Overtime   25 0 25 5   20 75 60 4500
                0 0
Subcontract
Output-
0 0 0 0 0 0 0      
Forecast
Inventory                    
Beginning                    
Ending                    
Average                    
Backlog                    
Total Cost                   78500

Strategy/Plan:   For letter B              

Period Februar Marc April May June July Augus Total Cost/Uni T.
  y h t t Cost
Forecast   250 300 250 300 280 275 270 1925    
Output                    
Regular 275 275 275 275 275 275 250 1900 40 76000
Overtime               0 0 0
Subcontract         5   20 25 50 1250
Output-Forecast 25 -25 25 -25 0 0 0      
Inventory                    
Beginning 0 25 0 25 0 0 0      
Ending 25 0 25 0 0 0 0 50    
Average 12.5 12.5 12.5 12.5 0 0 0 0 2 100
Backlog                   0 0
Total Cost                     77350