As the Operations Manager for a pudding manufacturing plant, tasked with preparing an

aggregate plan for the coming year, several technical and economic factors must be
considered. The plant operates five days a week with 10 packaging lines running for 7.5
hours each on a regular shift. Overtime can be scheduled for up to two hours daily, requiring
all lines to run overtime when scheduled. Workers are paid $20.00/hour during regular shifts
and $30.00/hour during overtime. The standard production rate for each line is 450
cases/hour.

The marketing forecast predicts demand in 1,000-case units as follows: Q1-2,000; Q2-2,200;
Q3-2,500; Q4-2,650, and Q1 next year-2,200. Management mandates maintaining a two-
week safety stock supply in the warehouses, with ending inventory targets for each quarter.

The inventory carrying cost is $1.00 per case per year, and there are 200,000 cases in
inventory at the beginning of Q1. A stockout incurs a cost of $2.40 per case due to goodwill
loss and emergency shipping expenses.

Human resource considerations include a $5,000 cost for hiring and training a new
production employee and a $3,000 cost for laying off a worker.

To calculate costs, assumptions include basing inventory costs on quantities exceeding safety
stock, incurring backorder costs on negative deviations from planned safety stock, and
scheduling overtime over an entire quarter.

The immediate challenge is to create an aggregate plan that optimizes production, labor,
and inventory levels to meet demand fluctuations, incorporating overtime strategically to
balance costs. The plan must factor in seasonal peaks, promotions, and minimize costs
associated with hiring, training, laying off, inventory carrying, and backorders while ensuring
the safety stock requirement is met. A meticulous analysis considering these factors will
contribute to an efficient and cost-effective aggregate plan for the manufacturing plant