The ABC Company has the following demand data (highlighted ingreen) for the last 2 years of sales for all models of theirpopular ToyPop product (in units):
- The company currently has five employees on the ToyPop line, eachcapable of producing approximately two ToyPops per day (assume 25days per month).
- Hiring and layoff are not considered for Year 2018.
- The employees each earn $20 per hour for the standard 8-hour day,with $10 extra per hour premium for each hour of overtime.
- They can subcontract the production of the polybob, but to do socosts them $42 per unit above the standard cost.
- They can use inventory, but inventory holding costs are $25 permonth per unit, based on the number of units in inventory at theend of the month. They have room for only 200 units in inventory,after which they must use a public storage facility, which addsanother $15 per month to the inventory holding cost.
- Backorder cost is $150 per month per unit.
- They currently have (as of the end of December 2017) 29 units ininventory.

Number of employees	5 employees
Production rate/employee/day	2 units
Number of days/month	25 days
Regular production cost/hour	$20
Number of regular hours/day	8 hours
Overtime premium/hour	$10
Overtime capacity/month/employee	5 days
Subcontracting premium/unit	$42
Holding cost/month/unit	$25
Inventory storage capacity	200 units
Public storage holding cost premium	$15
Beginning inventory	29 units
Backorder cost/unit	$150

Month	2016 demand	2017 demand
January	232	254
February	301	325
March	422	398
April	355	369
May	296	324
June	288	298
July	233	255
August	194	242
September	274	256
October	244	266
November	221	235
December	247	249

(a) Use the 2016 and 2017 demand data to develop a forecast for2018 annual demand (month by month) (fill in cells G6 to S6).
Assume the ABC Company uses the simple moving average method.

(b) Use your 2018 forecast data to develop a "best" aggregateplan (SOP) using the Level Capacity strategy. Start the planningfrom calculating the following parameters

1. What is the number of hours needed for producing one unit ofToypop?

  2. What is the regular production cost per unit?

  3. What is the maximum overtime capacity permonth?

  4. What is the overtime cost per unit?

  5. What is the subcontracting cost per unit?

Assuming the inventory at the end of the planning period (i.e.,end of Dec.) should be as low as possible, fill in the followingtable

	January	February	March	April	May	June	July	August	September	October	November	December	Total	Costs
2018 demand
Regular capacity
Overtime capacity
Subcontracting capacity
												Total production quantity
Ending inventory
Backorder quantity
Inventory (internal)
Inventory (public storage)
													Total cost