Lunar Co.Ltd's estimated demand for the next 6 months in 2021 is as follows: Month Demand July 1500 August 1700 September 2000 October 1800 November 2200 December 1500 Management considers 2 aggregate plans as follows: a. Perform variations in the number of workers according to the level of demand. The current average production is 1500 units/month. Labor procurement costs $500,000 per 100 units, while the cost of reducing labor is $750,000 per 100 units. b. Keeping production levels constant at an average of 1500 units/month (to meet minimum demand) and to meet demand shortages through subcontracting at a marginal cost of $5,000 per unit. Subcontracting can only be done in a number of 500 units. Demand that cannot be met by production and subcontracting is a loss of sales and calculated at $5,000 per unit.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Lunar Co.Ltd's estimated demand for the next 6 months in 2021 is as follows:
| Month | Demand |
| July | 1500 |
| August | 1700 |
| September | 2000 |
| October | 1800 |
| November | 2200 |
| December | 1500 |
Management considers 2 aggregate plans as follows:
a. Perform variations in the number of workers according to the level of demand. The current average production is 1500 units/month. Labor procurement costs $500,000 per 100 units,
while the cost of reducing labor is $750,000 per 100 units.
b. Keeping production levels constant at an average of 1500 units/month (to meet minimum demand) and to meet demand shortages through subcontracting at a marginal cost of $5,000 per unit. Subcontracting can only be done in a number of 500 units. Demand that cannot be met by production and subcontracting is a loss of sales and calculated at $5,000 per unit.
In your opinion, as the company's operational manager, which plan should the company take (from points a & b above) so that the company can achieve production efficiency? Explain, why?
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