Graphical Method of Aggregate Planning

In the Module Overview, we stated that an “aggregate plan will include the quantity and timing of production for the intermediate future (typically 3-18 months ahead).” Some factors such as demand, pay rate, and the ability to use overtime or subcontract some of the production must be taken into consideration to keep the total cost of production as low as possible.
You have been asked to build the aggregate planning schedule for your factory for the next six months and to determine the best option.
This chart provides the variables and cost for each variable.
VariablesCostInventory carrying cost$7 per unit per monthSubcontracting cost$25 per unitAverage pay rate$12 per hour (8 hours per day)Overtime pay rate$18 per hour (above 8 hours per day)Labor-hours needed to produce one unit1.5 hours per unitUnits per day produced50Beginning inventory0Planned ending inventory0Lost sales per unit$30This chart provides the demand for the product and the number of production days per month.
MonthsDemandProduction DaysJanuary130022February80018March60021April150021May130022June130020Step1:Prepare your Aggregate Plan
Step 2: Update Your Aggregate Plan Using Overtime
Step 3: Update Your Aggregate Plan Using Outsourcing
Step 4: Summarize and Submit

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