Aggregate planning for dat inc

DAT, Inc., needs to develop an aggregate plan for its product line. Relevant data are :

Production time – 1 hour per unit

Beginning inventory – 500 units

Average labor cost – $10 per hour

Safety stock – one-half month

workweek – 5 days, 8 hours each day

shortage cost – $20 per unit per month

days per month – assume 20 workdays per month

carrying cost – $5 per unit per month


The forecast for next year is :

January – 2,500 …

February – 3,000 …

March – 4,000 …

April – 3,500 …

May – 3,500 …

June – 3,000 …

July – 3,000 …

August – 4,000 …

September – 4,000 …

October – 4,000 …

November – 3,000 …

December – 3,000


Management prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages.

Demand not met is carried over to the following month.

Develop an aggregate plan that will meet the demand and other conditions of the problem.

Do not try to find the optimum ; just find a good solution and state the procedure you might use to test for a better solution.

Make any necessary assumptions.

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