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:

Labour

The human effort, both physical and mental, used in the production process.

Competitive Bidding

A purchasing process in which suppliers submit bids to win the rights to fulfill a contract.

Bid Price

The price a buyer is willing to pay for a good, service, or financial instrument.

Incremental Costs

Costs that change with the level of output or activity, directly associated with a specific business decision.