SBS, a company that manufactures several models of skateboards, are about to pre

Question

SBS, a company that manufactures several models of skateboards, are about to prepare an aggregate plan that will cover six months. Their forecasted demand for the following six months is as follows: In addition, the production costs for SBS are summarized in the table below: SBS wants to develop a level workforce plan that allows a steady rate of regular-time output, mainly using inventory' to absorb uneven demand, but also allowing for backordering. In this plan, they do not want to use overtime. They currently have 15 workers, each producing up to 20 skateboards per month. In addition, they currently have zero inventory and want to finish with zero inventory' and zero backlogs. Note that SBS wants a more realistic calculation of their inventory' cost that assumes that their inventory' for a given month is equal to the average between their starting and ending inventories for that month. Also, SBS does not want to hire or fire any of their current laborers. Prepare an aggregate plan and determine its cost based on the above information.

Explanation / Answer

SBS AGGREGATE PLAN AND ITS COST:

Month Forcast Production Backlog Inventory Inventory cost $2 (average basis) Regular time cost $2 Overtime cost $3 Backorder cost $5 Tota cost $ 1 200 300 100 200 600 800 2 200 300 200 300 600 900 3 300 300 200 400 600 1000 4 400 300 100 300 600 900 5 500 300 0 600 500 1100 6 200 300 0 600 600 Total $5300

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