Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers,
ID: 435446 • Letter: M
Question
Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of $60 per engine. The beginning inventory is zero engines. Overtime has a cost of $90 per engine.
Month
Develop a chase plan that matches the forecast and compute the total cost of your plan. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is $2 per engine per month. Backlog cost is $90 per engine per month. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of $60 per engine. The beginning inventory is zero engines. Overtime has a cost of $90 per engine.
Explanation / Answer
Chase Plan Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1040 Output 120 135 140 120 125 125 140 135 1040 Regular 120 130 130 120 125 125 130 130 1010 Overtime 0 5 10 0 0 0 10 5 30 Subcontract 0 0 0 0 0 0 0 0 0 Output - Forecast 0 0 0 0 0 0 0 0 0 Inventory Beginning 0 0 0 0 0 0 0 0 Ending 0 0 0 0 0 0 0 0 Average 0 0 0 0 0 0 0 0 Backlog 0 0 0 0 0 0 0 0 Costs Output 7200 8250 8700 7200 7500 7500 8700 8250 63300 Regular 7200 7800 7800 7200 7500 7500 7800 7800 60600 Overtime 0 450 900 0 0 0 900 450 2700 Subcontract 0 Inventory 0 Back order 0 Total 7200 8250 8700 7200 7500 7500 8700 8250 63300 Level Plan Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1040 Output 130 130 130 130 130 130 130 130 1040 Regular 130 130 130 130 130 130 130 130 1040 Overtime 0 0 0 0 0 0 0 0 0 Subcontract 0 0 0 0 0 0 0 0 0 Output - Forecast 10 -5 -10 10 5 5 -10 -5 0 Inventory Beginning 0 10 5 0 5 10 15 5 Ending 10 5 0 5 10 15 5 0 Average 5 7.5 2.5 2.5 7.5 12.5 10 2.5 Backlog 0 0 5 0 0 0 0 0 Costs Output 7810 7815 8255 7805 7815 7825 7820 7805 62950 Regular 7800 7800 7800 7800 7800 7800 7800 7800 62400 Overtime 0 0 0 0 0 0 0 0 0 Subcontract 0 0 0 0 0 0 0 0 0 Inventory 10 15 5 5 15 25 20 5 100 Back order 0 0 450 0 0 0 0 0 450 Total 7810 7815 8255 7805 7815 7825 7820 7805 62950
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