Old pueblo engineering contractors creates six-month

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Reference no: EM13382226

Old Pueblo Engineering Contractors creates six-month "rolling" schedules, which are recomputed monthly. For competitive reasons (they would need to divulge proprietary design criteria, methods, and so on), Old Pueblo does not subcontract. Therefore, its only options to meet customer requirements are (1) work on regular time; (2) work on overtime, which is limited to 30 percent of regular time; (3) do customers' work early, which would cost an additional $5 per hour per month; and (4) perform customers' work late, which would cost an additional $10 per hour per month penalty, as provided by their contract.

Old Pueblo has 25 engineers on its staff at an hourly rate of $30. The overtime rate is $45. Customers' hourly requirements for the six months from January to June are

JANUARY FEBRUARY MARCH APRIL MAY JUNE
5,000 4,000 6,000 6,000 5,000 4,000
________________________________________

Develop an aggregate plan. Assume 20 working days in each month. (Hint: Assume no backordered work at the end of the plan.)

January February March April May June
Forecast work hours 5,000 4,000 6,000 6,000 5,000 4,000
Beginning inventory (work done earlier)

Work hours required

Regular work hours available

Overtime hours

Total planned hours

Ending inventory (early work completed)

Ending backorders (work to be done later)

________________________________________

January February March April May June
Straight time $
$
$
$
$
$

Overtime

Inventory

Backorder

________________________________________

________________________________________
Total $
$
$
$
$
$

________________________________________
$

Reference no: EM13382226

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