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Aggregate Planning Exercise
Aggregate Planning Exercise
Aggregate Planning Exercise
I: An aggregate plan is to be developed for the forecast of demand covering nine periods shown
in Table 1. Other relevant production and cost information is also provided. (Note that since
this plan does not allow for any inventory buildup, a decision has been made to carry 10 units
of safety stock, but no overtime or subcontract labor is used). Find the cost associated with an
aggregate plan that involves varying the size of the work force in order to have a production
rate that matches demand.
II: Using the demand shown in Table 1 (plus 10 more units in periods 8 and 9), develop an
aggregate plan based on the use of the 10 regular time production worker at a constant rate,
with inventories used to satisfy peak demand. Assume a constant output rate of 40 units per
period. No safety stock is required, but total demand of 380 units must be met.
III: Custom Furniture Co. currently has 100 employees and has forecast quarterly demand as
shown in Table 2. The historical average production rate is 40 units per employee per quarter,
and the firm has a beginning (safety stock) inventory of 1,000 units. The hiring and training
cost is ₹400 per employee, and the layoff cost is ₹600 per employee. Inventory is carried at a
cost of ₹8 per unit per quarter. Use the data to develop an aggregate plan that uses variable
employment and inventory to meet demand.