Right now is August 1, 2020. You would like to construct an aggregate production plan for product PX27 for the
four quarters of 2021.
Cost of regular production = 65 $/u.
Cost of overtime production = 90 $/u.
Inventory holding cost = 5 $/u/qtr.
Cost of increasing regular production =
Cost of decreasing regular production=
80 $/u.
90 $/u.
The regular production in Quarter 4 of 2020 is 898 u.
The inventory a the beginning of Quarter 1 of 2021 is estimated to be 105 u.
The forecasted demand the four quarters of 2021 are: 1,681, 1,450, 1,792, and 1,370 units.
You want to use the level production strategy with overtime production.
Furthermore, you will keep inventory as low as possible but stockouts (shortages) must be avoided.
Suppose you keep the quarterly regular production constant at 1,653 units and add overtime production if
necessary.
You must perform the needed calculation and answer the question shown below.
NOTE: Do not use any comma in your answers.
The total cost of holding inventory is
____dollars.