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Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must...

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General Management

Manager T. C. Downs of Plum Engines, a producer of lawn mowersand leaf blowers, must develop an aggregate plan given the forecastfor engine demand shown in the table. The department has a regularoutput capacity of 140 engines per month. Regular output has a costof $65 per engine. The beginning inventory is zero engines.Overtime has a cost of $115 per engine.

Month 1 2 3 4 5 6 7 8

Total Forecast 130 135 130 143 130 135 135 134 1,072

b. Compare the costs to a level plan that uses inventory toabsorb fluctuations. Inventory carrying cost is $3 per engine permonth. Backlog cost is $135 per engine per month. There should notbe a backlog in the last month. Set regular production equal to themonthly average of total forecasted demand. Assume that usingovertime is not an option. (Negative amounts should be indicated bya minus sign. Leave no cells blank - be certain to enter "0"wherever required. Round average inventory row, Inventory cost row,and Total row values to 1 decimal.)

Answer & Explanation Solved by verified expert
3.9 Ratings (460 Votes)
The level strategy is given below in the table Given Regular production Monthly average of total    See Answer
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