Manager T C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers,
ID: 469855 • Letter: M
Question
Manager T C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop arn 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 $80 per engine. The beginning inventory is zero engines. Overtime has a cost of $98 per engine Month 2 135 4 120 6 125 Total 1,040 125 140 135 Forecast 120 140 a. Develop a chase plan that matches the forecast and compute the total cost of your plan. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Total 4 125 125 140 135 1,040 120 135 140 120 Forecast Output Regular Overtime Subcontract Output - Forecast Inventory Beginning Ending Average Backlog Output Regular Overtime Subcontract Inventory Backorder TotalExplanation / Answer
The costts for the chase and level plans are calculated as shown in the table below.
In the Chase Plan, Output = Forecast
The output is produced in regular hours upto 130 units and the rest are provided by overtime.
The costs are obtained by multiplying by $80 and $98 respectively.
In the Level Plan, Output = 1040/8 = 130 per period.
The Inventory and Backlog figures are computed accordingly.
The costs are obtained by multiplying them with $80, $2 and $89 respectively.
Thus, the Chase Plan costs $ 83740 while the Level Plan costs $ 83790.
Thus, the Chase Plan is marginally better in terms of cost.
Period 1 2 3 4 5 6 7 8 Total a) Chase Plan Forecast 120 135 140 120 125 125 140 135 1040 Output - Regular 120 130 130 120 125 125 130 130 - Overtime 0 5 10 0 0 0 10 5 Output - Forecast 0 0 0 0 0 0 0 0 Costs - Regular 9600 10400 10400 9600 10000 10000 10400 10400 80800 - Overtime 0 490 980 0 0 0 980 490 2940 - Total 9600 10890 11380 9600 10000 10000 11380 10890 83740 b) Level Plan Forecast 120 135 140 120 125 125 140 135 1040 Output - Regular 130 130 130 130 130 130 130 130 - Overtime Output - Forecast 10 -5 -10 10 5 5 -10 -5 Inventory - Beginning 0 10 5 0 10 15 20 10 - Ending 10 5 0 10 15 20 10 5 - Average 5 7.5 2.5 5 12.5 17.5 15 7.5 Backlog 0 0 5 0 0 0 0 0 Costs - Regular Output 10400 10400 10400 10400 10400 10400 10400 10400 83200 - Inventory 10 15 5 10 25 35 30 15 145 - Backorder 0 0 445 0 0 0 0 0 445 - Total 10410 10415 10850 10410 10425 10435 10430 10415 83790Related Questions
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