Question

Refer to Example 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 unit will remain the same, but the output rate for regular time will be 450. Regular output is the same as in Example 1 for periods 1, 2, and 3; 0 for period 4; and 450 for each of the remaining periods. Note, though, that the forecast of 400 units in period 4 must be dealt with. Prepare the aggregate plan, and compute its total cost.

Answer 1

Answer:

See the explanation for the answer

Explanation:

The aggregate plan is prepared below;

Period             1               2              3                 4                5                   6

Forecast        200         200          300            400           500              200

Output

Regular          300         300          300            0               450               450

Overtime

Subcontract

Output

Forecast         100         100             0            400              50               25    

Inventory

Beginning      0            100            200          200              0                 0

Ending           100         200           200           0                  0                 0

Average        50           150           200           100               0                 0

Backlog           0             0               0             200              250             0

Costs

Output

Regular          600         600         600            0                 900          900

Overtime

Subcontract

Inventory        50           150           200         100                 0                  0

Backorder at5  0            0               0            1,000            1,250              0

Total                 650       750           800        1,100            2,150            900