Aggregate Planning Practice Problem
Armstrong Manufacturing Co. is preparing an aggregate production plan for next year. Its production manager, Leon Washington, has compiled the following information:
- Forecast of quarterly demand in hours per quarter: 250,000; 300,000;
400,000; 300,000
Beginning inventory in hours: 20,000
Initial employment level: 500 workers
- Hours worked per quarter by cach worker. 400 hours of regular time. 100
hours of overtime (maximum)
- Inventory holding costs in dollars per hour per quarter: 54
Cost of regular time production per hour: $12
Cost of overtime production per hour: $15
Cost to hire a worker: $1000
Cost to Layoff a worker: $1500
Formulate an LP model to identify an optimal production plan by building a decision model in EXCEL.