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Aggregate Pp

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Submitted By sumit123
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Problems on Aggregate Production Planning 1. Planners of a company have obtained information regarding the forecasted demand of a product as follows:
Period 1 2 3 4 5 6 Total
Forecast 200 200 300 400 500 200 1800
Costs
Regular time: $2/unit
Overtime: $3/unit
Subcontract: $6/unit
Inventory: $1/unit
Backorder: $5/unit
They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Overtime and subcontracting are not used because they want steady output. They intend to start with zero inventory on hand in the first period. 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 inventory is zero. There are 15 workers, each can produce 20 units per period. 2. Suppose that the regular output rate drops to 290 units per period in the above problem due to an expected change in production requirements. Costs will not change. Prepare an aggregate plan and compute its total cost for each of these alternatives: a. Use overtime at a fixed rate of 20 units per period as needed. Plan an ending inventory of zero for period 6. Backlogs cannot exceed 90 units per period. b. Use subcontracting at a maximum rate of 50 units per period; the usage need not be the same in every period. Have an ending inventory of zero in the last period. Again backlogs cannot exceed 90 units in any period. Compare these two plans. 3. An organization uses overtime, inventory and subcontracting to absorb fluctuation in demand. A production plan for 12 months is devised and updated each month. The expected demand for the next 12 periods is as follows:
Period: 1 2 3 4 5 6 7 8 9 10 11 12
Demand 10 15 30 27 30 16 12 10 18 26 30 15
(‘000)
The following costs and

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