Scenario 8.1 - Gang Aft Agley
Gang Aft Agley,a manufacturing company,faces the aggregate planning problem shown in the table below.Cost of regular production is $5 per unit,the cost of producing the same unit on overtime is $7.50,the cost of subcontracting is $9 per unit,and the cost of carrying a unit in inventory from one month to the next is $2.
$$\begin{array} { | l | c | c | c | c | c | }
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \
\hline \text { Forecast } & 500 & 750 & 1200 & 650 & 300 \
\hline \text { Beginning Inventory } & 100 & & & & \
\hline \text { Regular Time } & & & & & \
\hline \text { Overtime } & & & & & \
\hline \text { Subcontracting } & & & & & \
\hline \text { Ending Inventory } & & & & & \
\hline
\end{array}$$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window.The plant capacity is 600 units per month produced using two shifts,regardless of the number of days in a month.By policy,management wants to avoid stockouts.
-Which of these statements about Scenario 8.1 is evident without even developing an aggregate plan?

Question

Scenario 8.1 - Gang Aft Agley
Gang Aft Agley,a manufacturing company,faces the aggregate planning problem shown in the table below.Cost of regular production is $5 per unit,the cost of producing the same unit on overtime is $7.50,the cost of subcontracting is $9 per unit,and the cost of carrying a unit in inventory from one month to the next is $2.
 $$\begin{array} { | l | c | c | c | c | c | } 
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \
\hline \text { Forecast } & 500 & 750 & 1200 & 650 & 300 \
\hline \text { Beginning Inventory } & 100 & & & & \
\hline \text { Regular Time } & & & & & \
\hline \text { Overtime } & & & & & \
\hline \text { Subcontracting } & & & & & \
\hline \text { Ending Inventory } & & & & & \
\hline
\end{array}$$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window.The plant capacity is 600 units per month produced using two shifts,regardless of the number of days in a month.By policy,management wants to avoid stockouts.
-Which of these statements about Scenario 8.1 is evident without even developing an aggregate plan?

Quizplus · Accepted Answer

Since the forecasted demand exceeds the regular time production capacity in every month, some level of overtime will be required to meet the demand. However, the labor contract restricts the amount of overtime that can be used, so it may not be possible to meet all of the demand with overtime alone. Therefore, it is likely that some subcontracting will also be needed. The problem statement does not provide enough information to determine whether ending inventory will be negative or whether overtime must exceed subcontracting or vice versa.

Scenario 8 The Labor Contract at the Plant Prohibits Both Overtime and Company,faces