AGGRGATE PLANNING, SYSTEMS OPERATIONS MANAGEMENT HELP

Case #2: Aggregate Planning at Rowley Apparel Rowley Apparel, manufacturers of the famous “Race -A-Rama” swimwear line, would like to plan production for the coming year. Demand for swimwear is extremely seasonal. The aggregate demand forecast for the next e ight months is given below: Month Demand Forecast May 3000 June 3500 July 4500 August 3000 September 1000 October 500 November 500 December 3000 The company expects to have 1200 units in inventory at the beginning of May and would like to have no invento ry at the end of December. There are currently 7 employees, each of whom can produce 220 units a month in regular time. The cost of hiring an employee is $1500 and the cost of firing an employee is $500. Labor cost per unit is $15 if produced in regular ti me and $25 if produced in overtime. The inventory holding cost is $4 per unit/month. Backorders are assumed to have a cost of $6 per unit/month. Joe Barnes, the production manager, heard about “level” and “chase” aggregate plans and would like to know whi ch would be more appropriate in this case. Your job is to respond to Joe’s questions by developing the two plans and reporting to him in a memo the details of the two plans. Which of these plans would you recommend? Make sure to include in your analysis, in addition to cost, non -financial considerations such as customer service and qualitative operational considerations. The memo should not exceed 3 pages including any displays (graphs, tables, etc.). The write -up will be evaluated on both the analysis and the presentation and is due on Wednesday, May 3. Extra Credit: Assume that Joe is also interested to know whether there is a production plan that would cost less tha n either the level or the chase plan. If you can find such a plan, include it in your report (you may use an extra page). Your extra credit will depend on how low the cost of the plan is.