An assembly plant produces three models of their Ride-on Lawn Mower: Model A, Model B, and Model…

An assembly plant produces three models of their Ride-on Lawn Mower: Model A, Model B, and Model C. The “planning horizon” of their aggregate production plan (APP) is 12 months, combining all three models together in total monthly production quantities. The forecast of demand for the aggregate quantities of the three models is provided in the table below. You have the responsibility to choose the best APP approach between the “Level strategy” and the “Chase strategy”, based on one criterion: minimization of the total cost of the plan. Specifically, you must determine, for each of the two production approaches (strategies): ? The month-by-month production volume for each of the two strategies – Level and Chase ? The capacity needed, as applicable (for example, number of workers9 and number of labour hours) ? The number of units in inventory at the end of each month for each strategy ? The total cost of the plan for each strategy. AGGREGATE PLANNING INPUT INFORMATION Forecast Demand PERIOD FORECAST DEMAND (UNITS)
January 106
February 94
March 325
April 422
May 607
June 733
July 724
August 624
September 597
October 401
November 214
December 133
Round up to the next integer (do not use decimals for the number of workers)
Beginning and ending inventory.
The beginning inventory: 109 units.
Ending inventory: the firm desires to end the year with inventory on hand of 118 units.
Cost information o Average inventory cost per unit: $3,700.
o Holding cost rate for finished goods inventory: 18%. The holding cost for raw materials and for WIP is omitted for this planning task o
On average, 1 mower unit requires 14 hours of labour to produce, and one worker contributes 160 hours per month (this is an approximation calculated as: 8 hours x 5 days x 4 weeks) o The average cost of the labour hour: $35 o Cost of hiring additional workers (to increase the daily production rate): $1080 per mower unit o Cost of laying off workers (to decrease the daily production rate): $1010 per mower unit.
Policy information o
The company DOES NOT subcontract under any circumstances o
The company DOES NOT use overtime/idle time under any circumstances.
An Excel workbook containing: 1. Comprehensive tables identifying the input info and the results obtained for the four requirements specified above (separately for each strategy). For example, for the “level” strategy: a table that includes the forecast demand, the production volume, the capacity needed in hours and number of workers, and the ending inventory – all of which on a monthly basis as well as for the entire planning period.
2. Graphs (separately for each strategy) illustrating the fluctuating Ending Inventory levels month by month (include in the graphs the lines for Production and for Demand).
3. The calculation of the “total cost of the plan” for each strategy (if both strategies are feasible). Include only the relevant cost components that allow the comparison between the two Aggregate Plan approaches (for example, there is no need to include the cost of materials or the overhead)

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