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    Aggregate planning for widget maker: chase plan with steady

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    Need to develop aggregate schedule for widget maker. Costs and 4 quarter forecast are provided below.

    Quarter Forecast
    1 1400
    2 1200
    3 1500
    4 1300

    Costs

    Prior quarter output 1500 units
    starting inven 0 units
    stockout cost for back
    orders $50/unit
    inven holding cost $10/unit for every unit held at end of quarter
    hiring workers $40/unit
    layoff workers $80/unit
    unit cost $30/unit
    overtime $15 extra per unit
    subcontracting $ na

    Questions

    a. Try a chase plan by hiring and layoffs to meet forecast as necessary.
    b. use a plan that holds employment steady
    c. which is the more economical plan.

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    https://brainmass.com/business/business-management/aggregate-planning-for-widget-maker-chase-plan-with-steady-205124

    Solution Preview

    See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print. Thanks

    Need to develop aggregate schedule for widget maker. Costs and 4 quarter forecast are provided below.

    FOUR QUARTER FORECAST
    Quarter Forecast
    1 1400
    2 1200
    3 1500
    4 1300

    Capacity of present labor force 1500 units per Qtr
    Inventory carrying cost 10 $ per unit per year
    Initial Inventory 0 Units
    Stockout Cost 50 $ per unit
    Hiring cost 40 $
    Firing cost 80 $
    Unit Cost $30
    Overtime rate $45
    Subcontracting na

    a.  Use chase plan by hiring and layoffs to meet forecast as necessary

    CHASE STRATEGY
    Month Q1 Q2 Q3 Q4 Total
    Demand 1,400.00 1,200.00 1,500.00 1,300.00 5,400.00
    Production 1,400.00 1,200.00 1,500.00 1,300.00 5,400.00

    Beginning inventory - - - - -
    Ending inventory - - - - -
    Inventory carrying cost - - - - -
    Stockout Cost - - - - -
    Hiring Cost - - ...

    Solution Summary

    Shows how to do the aggregate planning for production under the chase system with steady employment.

    $2.19

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