Situation 4: A company that produces a line of men’s suits, hires temporaries to help produce its winter product demand. For the current fourmonth rolling schedule, there are three temps on staff and 12 full
time employees. The temps can be hired when needed and can be used as needed, whereas the fulltime employees must be paid whether they are needed or not. Each fulltime employee can produce 175 suits, while each parttime employee can produce 145 suits per month. Demand for bathing suits for the next four months is as follows: May June July August 3,500 3,000 2,900 3,100 Suits cost $50 to produce and carrying cost is 25% per year. Beginning inventory in May is 375 completed suits. Develop an aggregate plan that uses the 12 fulltime employees each month and a minimum number of temporary employees. Assume that all employees will produce at their full potential each month. Calculate the inventory carrying cost associated with your plan using planned end of month levels.
