Aggregate plannig mrp

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Bus 331 – Operations Management
Module 4 Group Project
Aggregate Planning and MRP Solutions

1. A firm produces antifreeze solution in gallons. This product has a very seasonal demand patternduring the winter. Given the following costs and quarterly sales forecasts, you will be asked to develop production plans in order to meet the firm’s needs.

Quarter | Sales Forecast (Gallons) |Spring | 80,000 |
Summer | 50,000 |
Fall | 120,000 |
Winter | 150,000 |

Hiring Cost for plant worker | $100.00 |
Firing Cost for plant worker | $500.00 |
Inventory Holding Cost / Gallon /Quarter | $0.50 |
Production per Worker per Quarter | 1,000 Gallons |
Initial Workforce Level | 100 Employees |
Beginning Inventory | 0 Gallons |

a. Using a level production strategy, what isthe inventory level at the end of the fall quarter?
b. What is the inventory holding cost for the year using the level production strategy?
Quarter | Spring | Summer | Fall | Winter |
Demand |80,000 | 50,000 | 120,000 | 150,000 |
Production | 100,000 | 100,000 | 100,000 | 100,000 |
| | | | |
Beginning Inv | 0 | 20,000 | 70,000 | 50,000 |
Ending Inv | 20,000 | 70,000 | 50,000 |0 |
Cost | $10,000 | $35,000 | $25,000 | $0 |

Total Inventory Cost for the Year = $10,000 + $35,000 + $25,000 + $0 = $70,000

c. Using the chase demand strategy how many plant workers areneeded in the summer?
d. What is the cost of hiring and firing plant workers for the entire year using the chase demand strategy?
Quarter | Spring | Summer | Fall | Winter |
Demand | 80,000 | 50,000 |120,000 | 150,000 |
Production | 80,000 | 50,000 | 120,000 | 150,000 |
| | | | |
Workers Needed | 80 | 50 | 120 | 150 |
Workers Hired | | | 70 | 30 |
Workers Fired | 20 | 30 | | |Hiring / Firing Costs | $10,000 | $15,000 | $7,000 | $3,000 |

Total Hiring/Firing Cost for the Year = $10,000 + $15,000 + $7,000 + $3,000 = $35,000

2. Using the product structure tree below,...
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