A DVD player manufacturer is doing an aggregate planning for July through December. The firm has gathered the following data:
Plan: The firm will use the strategy of constant workforce with overtime.
Armed with the data provided, we will work out the production level, labor hours, labor cost, inventory holding cost etc.
Production – regular-time
= (no. of workers x no. of hours per day x no. of days)/(labor-hours/DVD)
= (8 x 8 x 20)/4
Production – overtime (except July)
= Demand forecast – Inventory (beginning of the month) – (Production at regular time)
= Production x labor hours per DVD
= Production x 4
= Inventory (end of the month) x 8
Regular-time labor cost
= Regular-time labor hours x $12/hour
Overtime labor cost
= Overtime labor hours x $18/hour
Jay Heizer & Barry Render, “Operations Management”, 8th edition