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Aggregate Planning Classroom Problems

Problem 1. Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information:

Period 1 2 3 4 5 6 Total
Forecast 200 200 300 400 500 200 1800

Costs:
Output
Regular Time = $2 per skateboard Overtime = $3 per skateboard Subcontract = $6 per skateboard Inventory = $1 per skateboard per period on average inventory Back orders = $5 per skateboard per period Zero inventory on hand

Prepare an aggregate plan and determine its cost using the preceding information. Assume a level output rate of 300 units per period with regular time. Note that the planned ending inventory is zero. There are 15 workers, and each can produce 20 skateboards per period. THIS IS A LEVEL PROBLEM. (HINT: Use inventory and backlog only.)

Month |1 |2 |3 |4 |5 |6 |Total | |Forecast |200 |200 |300 |400 |500 |200 |1800 | |Output- Reg |300 |300 |300 |300 |300 |300 |1800 | |Output –OT | | | | | | | | |Subcontract | | | | | | | | |Output-Forst |100 |100 |0 |-100 |-200 |100 | | |Inventory | | | | | | | | |Beg Inv. |0 |100 |200 |200 |100 |0 | | |End Inv. |100 |200 |200 |100 |0 |0 | | |Ave. Inv. |50 |150 |200 |150 |50 |0 |600 | |Backlog | | | | |100 | |100 | |Costs | | | | | | | | |Reg Time |600 |600 |600 |600 |600 |600 |3600 | |OT Time | | | | | | | | |Subcontract | | | | | | | | |Inventory |50 |150 |200 |150 |50 |0 |600 | |Backlog | | | | |500 | |500 | |Total Costs | | | | | | |$4700 | |

Problem 2:
Using the information from Problem 1, the President of the firm has decided to shut down the plant for vacation and installation of new equipment in period 4. After installation the cost per

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