SummerFun, Inc., produces a variety of recreation and leisure products Answer

Chapter 11: Problems 7

SummerFun, Inc., produces a variety of recreation and leisure products. The production manager has developed an aggregate forecast:

Use the following information to develop aggregate plans.

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

  1. Use regular production. Supplement using inventory, overtime, and subcontracting as needed. No backlogs allowed.
  2. Use a level strategy. Use a combination of backlogs, subcontracting, and inventory to handle variations in demand.


Chapter 11: Problems 9

Wormwood, Ltd., produces a variety of furniture products. The planning committee wants to prepare an aggregate plan for the next six months using the following information:

Month                                     1          2          3          4          5         6

Demand                      160      150      160      180      170      140

Capacity Regular        150    150      150      150      160      160

Overtime                     10        10        0          10        10        10

Cost per unit;

Regular time: $50

Overtime:         75

Subcontract:     80

Inventory pay period: 4

Subcontracting can handle a maximum of 10 units per month. Beginning inventory is zero. Develop a plan that minimizes total cost. No back orders are allowed.


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