# Problem 11-5 Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of \$60 per engine. The beginning inventory is zero engines. Overtime has a cost of \$90 per engine. Month 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040 a. Develop a chase plan that matches the forecast and compute the total cost of your plan.(Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “\$” sign in your response.) Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040 Output Regular Overtime Subcontract Output – Forecast Inventory Beginning Ending Average Backlog Costs: Output Regular \$ \$ Overtime Subcontract Inventory Backorder Total \$ \$ b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is \$2 per engine per month. Backlog cost is \$90 per engine per month.(Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “\$” sign in your response.) Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040 Output Regular Overtime Subcontract Output – Forecast Inventory Beginning Ending Average Backlog Costs: Output Regular \$ \$ Overtime Subcontract Inventory Backorder Total \$ \$

Problem 11-5

 Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a normal capacity of 130 engines per month. Normal output has a cost of \$60 per engine. The beginning inventory is zero engines. Overtime has a cost of \$90 per engine.

 Month 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040

 a. Develop a chase plan that matches the forecast and compute the total cost of your plan.(Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “\$” sign in your response.)

 Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040 Output Regular Overtime Subcontract Output – Forecast Inventory Beginning Ending Average Backlog Costs: Output Regular \$ \$ Overtime Subcontract Inventory Backorder Total \$ \$

 b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is \$2 per engine per month. Backlog cost is \$90 per engine per month.(Negative amounts should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “\$” sign in your response.)

 Period 1 2 3 4 5 6 7 8 Total Forecast 120 135 140 120 125 125 140 135 1,040 Output Regular Overtime Subcontract Output – Forecast Inventory Beginning Ending Average Backlog Costs: Output Regular \$ \$ Overtime Subcontract Inventory Backorder Total \$ \$