A Manager Has Prepared a Forecast of Expected Aggregate Demand

Essay

A manager has prepared a forecast of expected aggregate demand for the next six months.Develop an aggregate plan to meet this demand given this additional information: A level production rate of 100 units per month will be used.Backorders are allowed,and they are charged at the rate of $8 per unit per month.Inventory holding costs,using average monthly inventory levels,are $1 per unit per month.Determine the cost of this plan if regular time cost is $20 per unit and beginning inventory is zero.
$$\begin{array} { | c | r | } \hline \underline{\text { Month }} &\underline{ \text { Forecast }} \\\hline 1 & 80 \\\hline 2 & 100 \\\hline 3 & 120 \\\hline 4 & 110 \\\hline 5 & 100 \\\hline 6 & 90 \\\hline\end{array}$$