Deb Bishop Health and Beauty Products has developed a new shampoo, and you need to develop its aggregate schedule. The cost accounting department has supplied you the costs relevant to the aggregate plan, and the marketing department has provided a four-quarter forecast. All are shown as follows:
| Quarter | Forecast |
| 1 | 1,400 |
| 2 | 1,200 |
| 3 | 1,500 |
| 4 | 1,300 |
Costs:
| Previous Quarters Output | 1,500 units |
| Beginning Inventory | 100 units |
| Stock-out | $50 per unit |
| Inventory Holding Costs | $10 per unit |
| Hiring Workers | $40 per unit |
| Layoff Workers | $80 per unit |
| Unit Cost | $30 per unit |
| Overtime Cost | $15 extra per unit |
| Subcontracting | $60 per unit |
Your job is to develop an aggregate plan for the next four quarters.
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Plan A – First, try hiring and layoffs based on the prior quarter (to meet the forecast) as necessary. What is the cost of this plan? $ [ Select ] [“214,000”, “178,000”, “220,500”, “215,900”]
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Plan B – Then try a plan that holds employment steady. What is the cost of this plan? $ [ Select ] [“195,600”, “169,500”, “178,000”, “212,225”]
- Plan C – Then utilize a mixed strategy, first producing at a level production rate of 900 per quarter, then utilizing overtime with a cap of 200 units, then subcontracting. What is the cost of this plan? $ [ Select ] [“151,900”, “246,000”, “257,300”, “250,000”]
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Which is the more economical plan for Deb Bishop Health and Beauty Products?
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