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Helter Industries, a company that produces a line of women’s bathing suits, hires temporaries to help produce its summer product demand. For the current four-month rolling schedule, there are three temps on staff and 12 full-time employees. The temps can be hired when needed and can be used as needed, whereas the full-time employees must be paid whether they are needed or not. Each full-time employee can produce 205 suits, while each part-time employee can produce 165 suits per month. Demand for bathing suits for the next four months is as follows:

May June July August

3,200 2,800 3,100 3,000

Beginning inventory in May is 403 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $40 to produce and carrying cost is 24 percent per year.

Develop an aggregate plan that uses the 12 full-time employees each month and a minimum number of temporary employees. Assume that all employees will produce at their full potential each month. Calculate the inventory carrying cost associated with your plan using planned end of month levels.

Step by step solution

01

Aggregate planning

In aggregate planning, an aggregate arrangement is made to anticipate the creation of things to come according to the demand necessities.

02

Aggregate production plan for May and June

B6 = ROUNDUP (((B3-(B8+B12))/165), 0)

C6 = ROUNDUP (((C3-(C8+C12))/165), 0)

B8 = B5 x 205

C8 = C5 x 205

B9 = B6 x 165

C9 = B6 x 165

B10 = B9 + B8

C10 = C9 + C8

C12 = B13

B13 = B10+B12-B3

C13 = C10+C12-C3

B15 = 40 x 0.24 x B13

C15 = 40 x 0.24 x C13

03

Aggregate production plan for July and August

D6 = ROUNDUP (((D3-(D8+D12))/165), 0)

E6 = ROUNDUP (((E3-(E8+E12))/165), 0)

D8 = D5 x 205

E8 = E5 x 205

D9 = D6 x 165

E9 = E6 x 165

D10 = D9 + D8

E10 = E9 + E8

E12 = D13

D13 = D10+D12-D3

E13 = E10+E12-E3

D15 = 40 x 0.24 x D13

E15 = 40 x 0.24 x E13

04

Aggregate production plan

It tends to be seen that the brief workforce lays in every month. It is because doing such with assistance to keep the inventory cost at least level. Notwithstanding, assuming an impermanent workforceis employed will bring about high inventory holding costs.

On the off chance that a steady workforce for example 3 representatives (transitory) are recruited that will likewise fill the need yet will lead to high holding cost.

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