Product E is a new product and manufactured by Alpha company itself. This produc
ID: 423670 • Letter: P
Question
Product E is a new product and manufactured by Alpha company itself. This product was introduced to the market on July 2017 and the feedback of the market was very positive. Mary had provided the 2017 historical sale data of product E in the attached file. She wanted Jason to determine the optimal production plan for the first 4 weeks of 2018 for product E. Some information is given here:
2017 last week’s output =2,800
Beginning inventory = 0
Inventory holding cost = $40 per unit per week
Hiring employees = $40 per unit
Terminating employee = $80 per unit
Subcontracting cost =$60 per unit
Unit cost on regular time = $30 per unit
Overtime cost = $15 extra per unit
Jason’s job is to develop an aggregate plan. The three initial options he wants to evaluate are:
a. Plan A: a chase strategy that hires and fires personnel as necessary to meet the forecast.
b. Plan B: a level strategy.
c. Plan C: a level strategy that produces 2,800 units per week and meets the forecasted demand with inventory and subcontracting.
Which strategy Jason should to choose to get the lowest expected cost?
Week of 2017
Sales of Product E
1
N/A
2
N/A
3
N/A
4
N/A
5
N/A
6
N/A
7
N/A
8
N/A
9
N/A
10
N/A
11
N/A
12
N/A
13
N/A
14
N/A
15
N/A
16
N/A
17
N/A
18
N/A
19
N/A
20
N/A
21
N/A
22
N/A
23
N/A
24
N/A
25
N/A
26
N/A
27
1544
28
1597
29
1661
30
1703
31
1746
32
1802
33
1850
34
1902
35
1950
36
2003
37
2043
38
2097
39
2160
40
2202
41
2246
42
2295
43
2349
44
2397
45
2450
46
2499
47
2550
48
2603
49
2648
50
2691
51
2754
52
2808
DATA
Week 2014
Product A
Product B
Product C
Product D
1
31
54
250
200
2
32
51
250
199
3
32
55
246
206
4
32
55
247
198
5
34
54
246
199
6
37
56
255
208
7
34
56
246
199
8
38
56
247
201
9
39
52
245
203
10
43
56
246
202
11
42
56
239
203
12
44
55
239
203
13
45
62
245
200
14
46
52
237
203
15
45
57
240
205
16
49
52
244
203
17
47
65
238
203
18
47
56
243
205
19
49
62
239
203
20
49
55
236
204
21
48
57
242
205
22
54
66
236
202
23
53
68
237
203
24
54
58
236
210
25
55
67
236
203
26
57
64
229
210
27
58
64
237
206
28
61
66
234
206
29
61
62
235
208
30
59
64
231
205
31
58
65
230
209
32
64
62
229
202
33
55
70
228
206
34
63
67
225
207
35
57
71
230
209
36
67
68
228
209
37
70
70
228
203
38
64
63
227
208
39
70
69
228
206
40
66
71
224
204
41
74
67
225
211
42
70
73
224
211
43
75
68
223
205
44
74
76
214
205
45
79
75
223
208
46
77
75
221
210
47
75
72
223
211
48
72
72
221
209
49
76
78
220
210
50
83
78
223
215
51
83
79
220
209
52
77
75
215
211
Order Received Date
Week
Date of Placing Order
Product A
Product B
Product C
Product D
1
1/6/2017
1/9/2017
1/9/2017
1/8/2017
1/8/2017
2
1/13/2017
1/19/2017
1/15/2017
1/15/2017
1/15/2017
3
1/20/2017
1/21/2017
1/23/2017
1/20/2017
1/20/2017
4
1/27/2017
1/29/2017
1/29/2017
1/28/2017
1/28/2017
5
2/3/2017
2/9/2017
2/6/2017
2/3/2017
2/3/2017
6
2/10/2017
2/15/2017
2/14/2017
2/12/2017
2/12/2017
7
2/17/2017
2/21/2017
2/21/2017
2/17/2017
2/17/2017
8
2/24/2017
3/1/2017
2/27/2017
2/27/2017
2/27/2017
9
3/3/2017
3/7/2017
3/5/2017
3/4/2017
3/4/2017
10
3/10/2017
3/15/2017
3/13/2017
3/12/2017
3/12/2017
11
3/17/2017
3/20/2017
3/19/2017
3/19/2017
3/19/2017
12
3/24/2017
3/30/2017
3/27/2017
3/25/2017
3/25/2017
13
3/31/2017
4/6/2017
4/3/2017
4/1/2017
4/1/2017
14
4/7/2017
4/12/2017
4/9/2017
4/8/2017
4/8/2017
15
4/14/2017
4/19/2017
4/17/2017
4/15/2017
4/15/2017
16
4/21/2017
4/26/2017
4/24/2017
4/21/2017
4/21/2017
17
4/28/2017
5/1/2017
4/30/2017
4/29/2017
4/29/2017
18
5/5/2017
5/9/2017
5/7/2017
5/7/2017
5/7/2017
19
5/12/2017
5/15/2017
5/17/2017
5/12/2017
5/12/2017
20
5/19/2017
5/23/2017
5/22/2017
5/19/2017
5/19/2017
21
5/26/2017
6/1/2017
5/31/2017
5/28/2017
5/28/2017
22
6/2/2017
6/5/2017
6/4/2017
6/5/2017
6/5/2017
23
6/9/2017
6/15/2017
6/13/2017
6/10/2017
6/10/2017
24
6/16/2017
6/21/2017
6/20/2017
6/17/2017
6/17/2017
25
6/23/2017
6/27/2017
6/25/2017
6/25/2017
6/25/2017
26
6/30/2017
7/5/2017
7/4/2017
7/1/2017
7/1/2017
27
7/7/2017
7/14/2017
7/9/2017
7/7/2017
7/7/2017
28
7/14/2017
7/17/2017
7/15/2017
7/16/2017
7/16/2017
29
7/21/2017
7/23/2017
7/23/2017
7/22/2017
7/22/2017
30
7/28/2017
7/31/2017
7/30/2017
7/29/2017
7/29/2017
31
8/4/2017
8/12/2017
8/6/2017
8/6/2017
8/6/2017
32
8/11/2017
8/17/2017
8/14/2017
8/13/2017
8/13/2017
33
8/18/2017
8/21/2017
8/20/2017
8/19/2017
8/19/2017
34
8/25/2017
8/30/2017
8/27/2017
8/27/2017
8/27/2017
35
9/1/2017
9/8/2017
9/5/2017
9/3/2017
9/3/2017
36
9/8/2017
9/13/2017
9/12/2017
9/9/2017
9/9/2017
37
9/15/2017
9/22/2017
9/18/2017
9/16/2017
9/16/2017
38
9/22/2017
9/27/2017
9/24/2017
9/23/2017
9/23/2017
39
9/29/2017
10/2/2017
10/3/2017
9/30/2017
9/30/2017
40
10/6/2017
10/12/2017
10/9/2017
10/6/2017
10/6/2017
41
10/13/2017
10/16/2017
10/17/2017
10/15/2017
10/15/2017
42
10/20/2017
10/26/2017
10/21/2017
10/22/2017
10/22/2017
43
10/27/2017
10/29/2017
10/29/2017
10/27/2017
10/27/2017
44
11/3/2017
11/8/2017
11/6/2017
11/3/2017
11/3/2017
45
11/10/2017
11/11/2017
11/12/2017
11/10/2017
11/10/2017
46
11/17/2017
11/23/2017
11/19/2017
11/19/2017
11/19/2017
47
11/24/2017
11/24/2017
11/27/2017
11/25/2017
11/25/2017
48
12/1/2017
12/5/2017
12/3/2017
12/3/2017
12/3/2017
49
12/8/2017
12/13/2017
12/11/2017
12/9/2017
12/9/2017
50
12/15/2017
12/17/2017
12/17/2017
12/16/2017
12/16/2017
51
12/22/2017
12/27/2017
12/25/2017
12/23/2017
12/23/2017
52
12/29/2017
1/1/2018
1/2/2018
12/31/2017
12/31/2017
Week of 2017
Sales of Product E
1
N/A
2
N/A
3
N/A
4
N/A
5
N/A
6
N/A
7
N/A
8
N/A
9
N/A
10
N/A
11
N/A
12
N/A
13
N/A
14
N/A
15
N/A
16
N/A
17
N/A
18
N/A
19
N/A
20
N/A
21
N/A
22
N/A
23
N/A
24
N/A
25
N/A
26
N/A
27
1544
28
1597
29
1661
30
1703
31
1746
32
1802
33
1850
34
1902
35
1950
36
2003
37
2043
38
2097
39
2160
40
2202
41
2246
42
2295
43
2349
44
2397
45
2450
46
2499
47
2550
48
2603
49
2648
50
2691
51
2754
52
2808
DATA
Week 2014
Product A
Product B
Product C
Product D
1
31
54
250
200
2
32
51
250
199
3
32
55
246
206
4
32
55
247
198
5
34
54
246
199
6
37
56
255
208
7
34
56
246
199
8
38
56
247
201
9
39
52
245
203
10
43
56
246
202
11
42
56
239
203
12
44
55
239
203
13
45
62
245
200
14
46
52
237
203
15
45
57
240
205
16
49
52
244
203
17
47
65
238
203
18
47
56
243
205
19
49
62
239
203
20
49
55
236
204
21
48
57
242
205
22
54
66
236
202
23
53
68
237
203
24
54
58
236
210
25
55
67
236
203
26
57
64
229
210
27
58
64
237
206
28
61
66
234
206
29
61
62
235
208
30
59
64
231
205
31
58
65
230
209
32
64
62
229
202
33
55
70
228
206
34
63
67
225
207
35
57
71
230
209
36
67
68
228
209
37
70
70
228
203
38
64
63
227
208
39
70
69
228
206
40
66
71
224
204
41
74
67
225
211
42
70
73
224
211
43
75
68
223
205
44
74
76
214
205
45
79
75
223
208
46
77
75
221
210
47
75
72
223
211
48
72
72
221
209
49
76
78
220
210
50
83
78
223
215
51
83
79
220
209
52
77
75
215
211
Order Received Date
Week
Date of Placing Order
Product A
Product B
Product C
Product D
1
1/6/2017
1/9/2017
1/9/2017
1/8/2017
1/8/2017
2
1/13/2017
1/19/2017
1/15/2017
1/15/2017
1/15/2017
3
1/20/2017
1/21/2017
1/23/2017
1/20/2017
1/20/2017
4
1/27/2017
1/29/2017
1/29/2017
1/28/2017
1/28/2017
5
2/3/2017
2/9/2017
2/6/2017
2/3/2017
2/3/2017
6
2/10/2017
2/15/2017
2/14/2017
2/12/2017
2/12/2017
7
2/17/2017
2/21/2017
2/21/2017
2/17/2017
2/17/2017
8
2/24/2017
3/1/2017
2/27/2017
2/27/2017
2/27/2017
9
3/3/2017
3/7/2017
3/5/2017
3/4/2017
3/4/2017
10
3/10/2017
3/15/2017
3/13/2017
3/12/2017
3/12/2017
11
3/17/2017
3/20/2017
3/19/2017
3/19/2017
3/19/2017
12
3/24/2017
3/30/2017
3/27/2017
3/25/2017
3/25/2017
13
3/31/2017
4/6/2017
4/3/2017
4/1/2017
4/1/2017
14
4/7/2017
4/12/2017
4/9/2017
4/8/2017
4/8/2017
15
4/14/2017
4/19/2017
4/17/2017
4/15/2017
4/15/2017
16
4/21/2017
4/26/2017
4/24/2017
4/21/2017
4/21/2017
17
4/28/2017
5/1/2017
4/30/2017
4/29/2017
4/29/2017
18
5/5/2017
5/9/2017
5/7/2017
5/7/2017
5/7/2017
19
5/12/2017
5/15/2017
5/17/2017
5/12/2017
5/12/2017
20
5/19/2017
5/23/2017
5/22/2017
5/19/2017
5/19/2017
21
5/26/2017
6/1/2017
5/31/2017
5/28/2017
5/28/2017
22
6/2/2017
6/5/2017
6/4/2017
6/5/2017
6/5/2017
23
6/9/2017
6/15/2017
6/13/2017
6/10/2017
6/10/2017
24
6/16/2017
6/21/2017
6/20/2017
6/17/2017
6/17/2017
25
6/23/2017
6/27/2017
6/25/2017
6/25/2017
6/25/2017
26
6/30/2017
7/5/2017
7/4/2017
7/1/2017
7/1/2017
27
7/7/2017
7/14/2017
7/9/2017
7/7/2017
7/7/2017
28
7/14/2017
7/17/2017
7/15/2017
7/16/2017
7/16/2017
29
7/21/2017
7/23/2017
7/23/2017
7/22/2017
7/22/2017
30
7/28/2017
7/31/2017
7/30/2017
7/29/2017
7/29/2017
31
8/4/2017
8/12/2017
8/6/2017
8/6/2017
8/6/2017
32
8/11/2017
8/17/2017
8/14/2017
8/13/2017
8/13/2017
33
8/18/2017
8/21/2017
8/20/2017
8/19/2017
8/19/2017
34
8/25/2017
8/30/2017
8/27/2017
8/27/2017
8/27/2017
35
9/1/2017
9/8/2017
9/5/2017
9/3/2017
9/3/2017
36
9/8/2017
9/13/2017
9/12/2017
9/9/2017
9/9/2017
37
9/15/2017
9/22/2017
9/18/2017
9/16/2017
9/16/2017
38
9/22/2017
9/27/2017
9/24/2017
9/23/2017
9/23/2017
39
9/29/2017
10/2/2017
10/3/2017
9/30/2017
9/30/2017
40
10/6/2017
10/12/2017
10/9/2017
10/6/2017
10/6/2017
41
10/13/2017
10/16/2017
10/17/2017
10/15/2017
10/15/2017
42
10/20/2017
10/26/2017
10/21/2017
10/22/2017
10/22/2017
43
10/27/2017
10/29/2017
10/29/2017
10/27/2017
10/27/2017
44
11/3/2017
11/8/2017
11/6/2017
11/3/2017
11/3/2017
45
11/10/2017
11/11/2017
11/12/2017
11/10/2017
11/10/2017
46
11/17/2017
11/23/2017
11/19/2017
11/19/2017
11/19/2017
47
11/24/2017
11/24/2017
11/27/2017
11/25/2017
11/25/2017
48
12/1/2017
12/5/2017
12/3/2017
12/3/2017
12/3/2017
49
12/8/2017
12/13/2017
12/11/2017
12/9/2017
12/9/2017
50
12/15/2017
12/17/2017
12/17/2017
12/16/2017
12/16/2017
51
12/22/2017
12/27/2017
12/25/2017
12/23/2017
12/23/2017
52
12/29/2017
1/1/2018
1/2/2018
12/31/2017
12/31/2017
Explanation / Answer
Ans. The increase in no. of units from 51st week to 52nd week is 54 units. By following Naive method, the forecast for the 1st week of 2018 is sales of the 52nd week of 2017 + 54 units i.e. 2808+54= 2862.
Similarly, 2nd week = 2862+54=2916; 3rd week = 2916+54=2970; 4th week = 2970+54=3024.
PLAN A (only new hire cost will include): Last week output=2800 units,
Week 1=2862 units, Extra cost involved= 62*40+62*30=2480+1860= $4340
Week 2=2916 units, Extra cost involved= 116*40+116*30= $8120
Week 3= 2970 units, Extra cost involved= 170*40+170*30= $11,900
Week 4= 3024 untis, Extra cost involved= 224*40+224*30= $15,680
Total Expected cost = 4340+8120+11900+15680 = $40,040
PLAN B (only overtime cost will include):
Week 1=2862 units, Extra cost involved= 62*15+62*30= $2790
Week 2=2916 units, Extra cost involved= 116*15+116*30= $5220
Week 3= 2970 units, Extra cost involved= 170*15+170*30= $7650
Week 4= 3024 untis, Extra cost involved= 224*15+224*30= $10,080
Total Expected cost = $25,740
PLAN C (only subcontract cost will include):
Week 1=2862 units, Extra cost involved= 62*60+62*30= $5580
Week 2=2916 units, Extra cost involved= 116*60+116*30= $10,440
Week 3= 2970 units, Extra cost involved= 170*60+170*30= $15,300
Week 4= 3024 untis, Extra cost involved= 224*60+224*30= $20,160
Total Expected cost = $51,480
So in PLAN B, expected cost is lower.
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