A power toolmanufacturer has to perform aggregate planning for the next four seasons

1. A power toolmanufacturer has to perform aggregate planning for the next four seasons (quarters). The forecasts for the aggregate product for the next four seasons are as follows.

Period                                   Demand Forecast

Mar-May                                             420,000

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Jun-Aug                                                               580,000

Sep-Nov                                              180,000

Dec-Feb                                               130,000

Assume that there are 290 employees with the company. Employees are hired for at least onefull quarter. Cost of hiring an employee is $1200 and cost of firing is $2500 per employee. Inventory holding cost is $1 per unit per quarter. It is estimated that a worker can produce 1000units of aggregate product each quarter. Assume that company currently has 80,000 units ofaggregate product in inventory. The company can back order excess demand at a cost of $2per aggregate unit per quarter, only during the first three quarters. A regular‐time employee costs are $12.50 per hour. Thereare seven hours per day, five days per week, and four weeks per month. Overtime or idle time is not allowed.

1. Determine theaggregate plan using chase policy and the associated total cost. (10 points)
2. Determine the aggregate plan using constant workforce policy with no backorders, but with inventory. (10 points)
3. Determine the aggregate plan using constant workforce policy by allowing both backorders and inventory. (10 points)
4. Find the best cost policy amongst the above three policies (2 points)

2. The aggregate product in question 1 represents 3 types of products, namely Drills, Impact Drives, and Cutting Saws. Past sales represent 53%, 25% and 22% share for the Drills, Impact Drives, and Cutting Saws, respectively. Monthly demand per quarter can roughly be distributed as 40%, 35% and 25%, respectively.
   1. Determine the production plan for Drills, Impact Drives and Cutting Saws per month for Sep-Nov time period. (5 points)
   2. Develop a materials requirement plan using the answer obtained from part (a) for the three products for the Sep-Nov time period based on the following product bill-of-materials.(10 points)
   3. Consider the inventory holding cost to be $0.05 per unit per month, and shipment cost of $1200 per shipment (irrespective of the number of units shipped), and $0.10 per unit for the material cost.
      1. Develop an inventory plan by making all purchase of fasteners once. (9 points)
      2. Develop an inventory plan by purchasing every month, only the required quantity for that month. Consequently, no inventory is maintained from one month to another. (9 points).

Determine the better policy of the two policies. (2 point