Develop a Level Aggregate Plan Using Inventory and Back Orders

question 10

Essay

Develop a level aggregate plan using inventory and back orders (data given above).
(a) What is the production rate per period?
(b) No overtime is to be used. What is the required workforce level and how many workers are hired or fired at the beginning of period 1?
(c) What is the maximum ending inventory and when does it occur?
(d) What is the maximum amount of back orders and when does it occur?
(e) What is the total cost?
(f) What is the cost per unit?

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Definitions:

Demand Curve

A curve that shows the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Cournot Duopolists

A model of competition between two firms that decide on quantity to produce independently and simultaneously with the assumption of no further entry into the market.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded, usually downward sloping.

Total Costs

The sum of all the costs incurred in the production of goods or services, including both fixed and variable costs.