You would like to construct an aggregate production plan for product PX243 for t

Question

You would like to construct an aggregate production plan for product PX243 for the next four quarters Cost of regular production = 60 Su Cost of overtime production 90 S/u Inventory holding cost 10 S/u/qtr Cost of increasing production70 Su Cost of decreasing production 120 S/u Subcontracting cost 115 S/u Stockout cost 130 $/u Previous quarter's regular production 760 u Beginning inventory level 40 u The forecasted demand for the next four quarters are: 730, 700 850, and 760 units. You want to use the chase production strategy without overtime production and subcontract Furthermore, you will keep inventory as low as possible. Stockouts are not allowed. You must perform the calculation and answer the questions shown below NOTE: Do not use any comma in your answers. The regular production is increased by is The regular production is decreased by is The regular production is increased by is The regular production is decreased by is units in quarter 1. units in quarter 1 units in quarter 2 units in quarter 2 The regular production is increased by is units in quarter 3 The regular production is decreased by is units in quarter 3. The regular production is increased by is units in quarter 4 The regular production is decreased by is units in quarter 4.

Explanation / Answer

The regular production is increased by is 0 units in quater 1 The regular production is decreased by is 70 units in quater 1 The regular production is increased by is 10 units in quater 2 The regular production is decreased by is 0 units in quater 2 The regular production is increased by is 150 units in quater 3 The regular production is decreased by is 0 units in quater 3 The regular production is increased by is 0 units in quater 4 The regular production is decreased by is 90 units in quater 4 Workings: Previous Quater's Regular Production (units) Forecast for Next four Quater's (units) 1 2 3 4 (a) Forecast demand 730 700 850 760 (b) Beginning Inventory 40 (c) Production Required (a) - (b) 690 700 850 760 (d) Regular Production 760 690 700 850 760 (e) Increase in Regular production 0 10 150 0 (f) Decrease in Regular production 70 0 0 90 Note:- For calculation of increase or decrease in regular production units we need to compare the current quaters units with previous quater in each quater as compared below:- Increase in Regular production No increase = 0 (700 - 690) = 10 (850-700) = 150 No increase = 0 Decrease in Regular production (760-690) = 70 No Decrease = 0 No Decrease = 0 (850-760) = 90

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