Aggregate Planning

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Business Finance

Description

I would need this by Wednesday. There is a PDF file attached with the exercice,exercice

The memo should not exceed 3 pages including any displays. Students are encouraged to work on this assignment in teams not larger than 3 students. The write-up will be evaluated on both the analysis and the presentation and is due on Wednesday.

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SOM 306, Spring 2018 A. Dechter Case #2: Aggregate Planning at In-Line Industries In-Line Industries (ILI) produces recreational in-line skates. Demand is seasonal, peaking in the summer months. ILI has forecasted the following demand in pairs of skates for their most popular line of skates for the next 8 months: Month March April May June July August September October Demand (pairs) 900 1500 2500 3000 1400 1000 600 400 The company will have 500 units in inventory at the beginning of March and would like to have 1000 units in inventory at the end of October in anticipation of increased demand during the holiday season. There are currently 6 employees, each of whom can produce 220 units a month in regular time. The cost of hiring an employee is $1200 and the cost of firing an employee is $600. Labor cost per unit is $15 if produced in regular time and $20 if produced in overtime. The inventory holding cost is $2 per unit/month. Backorders are assumed to have a cost of $10 per unit/month. Jack Stoner, the production manager, heard about “level” and “chase” aggregate plans and would like to know which would be more appropriate in this case for the next 8 months. Assume that you have been hired as a consultant and that your job is to respond to Jack’s questions by developing the two plans he heard about and reporting to him in a memo the results of your analysis. Which plan would you recommend? Make sure to include in your analysis, in addition to cost, non-financial considerations such as customer service and other qualitative operational considerations. The memo should not exceed 3 pages including any displays. Students are encouraged to work on this assignment in teams not larger than 3 students. The write-up will be evaluated on both the analysis and the presentation and is due on Monday, May 7 (Wednesday, May 9), the last day of class. Optional Extra Credit: Assume that Jack is also interested to know whether there is a production plan that would cost less than either the level or the chase plan. If you can find such a plan, include it in your report (you may use an additional page).
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Explanation & Answer

Attached.

Running head: AGGREGATE PLANNING AT IN-LINE INDUSTRIES

Aggregate Planning at In-Line Industries
Name:
Instructor:
Course:
Date:

2
AGGREGATE PLANNING AT IN-LINE INDUSTRIES
Aggregate Planning at In-Line Industries
In-Line Industries (ILI) produces recreational in-line skates. Demand is seasonal, peaking in
the summer months. ILI has forecasted the following demand in pairs of skates for their most
popular line of skates for the next 8 months (March to October):
Level Strategy Plan

This plan consists of regular production of 220 units per month per employee.
Regular production= no. of employees (6) multiplied by 220 units per month

March

April

May

June

July

August

September

October

Total

Gross requirement

900

1500

2500

3000

1400

1000

600

400

11300

On-hand

500

920

740

0

0

1000

0

80

Net requirement

400

580

1760

3000

2280

1960

1240

320

11540

Regular production

1320

1320

1320

1320

1320

1320

1320

1320

10560

Overtime production

0

0

440

800

0

0

0

0

1240

Beginning inventory

500

920

740

0

0

0

0

80

Ending inventory

920

740

0

0

0

80

80

1000

2740

Backorder

0

0

0

880

960

640

0

0

2480

Regulation production cost= Regular production (1320) *$15
Overtime production cost= Overtime production multiplied by $20
Inventory holding cost= ending inventory multiplied by $2
Backorder cost= Backorder multiplied by $10
Type of costs
Regular production

19800

19800

19800

19800

19800

19800

19800

19800

19800

Overtime production

0

0

8800

16000

0

0

0

0

24800

Inventory holding cost

1840

1480

0

0

0

0

160

2000

5480

Backorder cost

0

0

0

8800

9600

6400

0

0

24800

3
AGGREGATE PLANNING AT IN-LINE INDUSTRIES
Total

213480

$213,480 is the total cost of level production plan.

Chase Strategy Plan
In chase strategy, workers are hired and fired to meet the dem...


Anonymous
Just what I was looking for! Super helpful.

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