XYZ company is preparing its aggregate production plan for 2012. The monthly demand forecasts are… 1 answer below »

XYZ company is preparing its aggregate production plan for 2012. The monthly demand forecasts are given in Table below. The company is expected to have 100 workers on the payroll and 150 units in inventory at the end of 2011. Each worker can produce 10 units per month on regular time and 2 units per month in overtime.
Additional data:
1. Regular time production cost—$200 per unit
2. Overtime production cost—$300 per unit
TABLE: 2012 Monthly Demand Forecasts
Month Demand
1 500
2 600
3 600
4 800
5 1300
6 2000
7 2500
8 3000
9 2400
10 1800
11 1500
12 1200
3. Hiring cost—$500 per worker
4. Firing cost—$3000 per

XYZ company is preparing its aggregate production plan for 2012. The monthly demand forecasts are given in Table below. The company is expected to have 100 workers on the payroll and 150 units in inventory at the end of 2011. Each worker can produce 10 units per month on regular time and 2 units per month in overtime.
Additional data:
1. Regular time production cost—$200 per unit
2. Overtime production cost—$300 per unit
TABLE: 2012 Monthly Demand Forecasts
Month Demand
1 500
2 600
3 600
4 800
5 1300
6 2000
7 2500
8 3000
9 2400
10 1800
11 1500
12 1200
3. Hiring cost—$500 per worker
4. Firing cost—$3000 per worker
5. Desired final inventory (December 2012)—100 units
6. Desired final workforce (December 2012)—150 workers
7. Inventory holding cost is charged based on the average inventory at the beginning and end of the month at $50 per unit per month
8. No shortages are allowed
(a) Determine a production plan cost using the “chase” strategy.
(b) Determine a production plan cost using the “level” strategy.

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