Aggregate planning

Victoria Secret Industries, a company that produces children dress, hires temporaries to help
produce its product demand. There are three temporary of staff and 12 full time employees.
The temporary staff can be hired when needed and can be used as needed whereas the full
time employees must be paid whether they are needed or not. Each full time employee can
produce 214 units/month while part time employee can produce 174 units/month. Each full
time employee is paid $2400 per month and the temporary staffs is paid $1800 per month. The
demand for four consequence months was given in Table Q1.
Table Q1

Month Jan Feb Mac Apr

Demand 3260 2860 3160 3060

Beginning inventory in Jan is 407 units. The dress cost is $30/units to produce and the holding
cost is $1 per month in average.

a. Develop an aggregate plan that uses the 12 full time employees each month and a
minimum number of temporary employees. Calculate the total cost for the plan.
b. The industry has decided to stop employed temporary staff and will outsource
subcontracting to overcome any excess demand faces. The subcontracting cost is $37
per unit. Determine the total cost for the plan.
c. Evaluate the difference between plan a) and b).