Determine aggregate production plan for next five months

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Reference no: EM132144883

The SCO Candy Company would like to determine an aggregate production plan for the next five months. The company makes many different types of candy but feels it can plan its total production in pounds provided that the mix of candy sold does not change too drastically. At the present time, the company has 50 workers and 6000 pounds of candy in inventory. Each worker can produce 1 pound of candy in an hour and gets paid $20 an hour (use 160 hours of regular time per month). A shortage of inventory results in lost sales and its estimated to cost $1 per unit short. Inventory carrying costs are $0.1 per pound remaining at the end of each month. It costs $1,200 to hire a worker and $1,500 to lay off a worker. The forecast sales for the next five months are 9200, 9600, 11200, 7680, and 8000 pounds of candy.

a) Using the Chase production strategy for the next five months, how many workers are needed each month, and what is the total cost? You can use the following table for your work (you may extend the table or leave excess rows blank), please also identify all the cost components (either in the table or in words); same for part b.

b) Using the Level production strategy for the next five months, how many workers are needed, how much inventory remains in stock at the end of each month and what is the total cost?

c) Would you prefer a chase or a level strategy for this company, why?

Reference no: EM132144883

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