Problem 11-5 Manager T. C

Problem 11-5

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

 12345678Total

  Forecast1201351401201251251401351,040

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.)

  Period               1               2               3               4               5               6               7               8            Total

  Forecast1201351401201251251401351,040  

  Output         

    Regular

    Overtime

    Subcontract         

  Output - Forecast 

  Inventory         

    Beginning         

    Ending         

    Average         

  Backlog         

  Costs:         

  Output         

    Regular$ $

    Overtime

    Subcontract         

  Inventory         

  Backorder         

  Total$ $

b.

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.)

  Period               1               2               3               4               5               6               7               8            Total

  Forecast1201351401201251251401351,040  

  Output         

    Regular

    Overtime         

    Subcontract         

  Output - Forecast 

  Inventory         

    Beginning 

    Ending 

    Average 

  Backlog 

  Costs:         

  Output         

    Regular$ $

    Overtime         

    Subcontract         

  Inventory

  Backorder

  Total$ $