Suppose you have been given responsibility for developing thesix-month aggregate production plan at Soda Galore, a manufacturerof soft drinks. Your company makes three types of soft drinks:regular, diet, and super-caffeinated. Fortunately, all three typesare made using the same production process, and the costs relatedto switching between the three types are so minimal that they canbe ignored. Thus, you can treat your problem as an aggregateplanning exercise where the planning unit is cases of soft drinks,regardless of what types of drinks they are.
| January | 16,000 |
| February | 24,000 |
| March | 32,000 |
| April | 32,000 |
| May | 60,000 |
| June | 88,000 |
| Total Demand | 252,000 |
| Average Monthly Demand | 42,000 |
| Current Workforce | 10 workers |
| Average Monthly Output per Worker | 2000 cases per month |
| Inventory Holding cost | $0.30 per case per month |
| Regular wage rate | $36 per hour |
| Regular production hours/ month/ worker | $100 |
| Overtime wage rate | $54 per worker |
| Hiring cost | $1000 per worker |
| Firing cost | $1500 per worker |
| Subcontracting cost | $2.90 per case |
| Beginning inventory | 7,000 (all safety stock) |
A)Total cost is workforce size adjusted
Total cost if overtime production used
Total cost if subtracting used
B)After much internal discussion, the company decides tomaintain a permanent workforce of 10 production workers. Given thesame planning information and this new requirement, develop asix-month production plan based on hybrid production. Determine thecost of the hybrid production plan. Use the overtime cost.
