Agreggated Planning

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Chapter 14: Aggregate Planning

2.Bob Carlton’s Golf Camp
a.The peak demand is 6,400 hours in quarter 2. As each employee can work 600 hours per quarter (480 on regular time and 120 on overtime), the level workforce that covers requirements and minimizes undertime is 6,400/600 = 10.67 or 11 employees.

| | |Cost |Calculation |Amount | | | |Regular wages |($7200 per quarter)(11)(8 quarters) |$633,600 | | | |Overtime wages* |(1,120 hr in quarter 2)($20 per hr) |22,400 | | | | |(960 hr in quarter 6)($20 per hr) |19,200 | | | |Hire costs |($10,000 per hire)(3 hires) |30,000 | | | | |TOTAL |$705,200 |

*The 11 workers can produce (11)(480) = 5,280 hours of regular time in any quarter. The 6,400-hour requirement in quarter 2 exceeds this amount by 1,120 hours. The 6,240-hour requirement in quarter 6 exceeds this amount by 960 hours.

The total undertime hours can be calculated as:

| | |Quarter 1 |11(480) – 4,200 |1,080 | hours | | | |Quarter 3 |11(480) – 3,000 |2,280 | | | | |Quarter 4 |11(480) – 4,800 |480 | | | | |Quarter 5 |11(480) – 4,400 |880 | | | | |Quarter 7 |11(480) – 3,600 |1,680 | | | | |Quarter 8 |11(480) – 4,800 |480 | | | | | | |6,880 | hours |

b.The chase strategy

| | |Quarter |Demand (hr) |Workforce |Hires |Fires | | | |1 |4,200 | 9 |1 |— | | | |2 |6,400 |14 |5 |— | | | |3 |3,000 | 7 |— |7 | | | |4 |4,800 |10 |3 |— | | | |5 |4,400 |10 |— |— | | | |6 |6,240 |13 |3 |— | | | |7 |3,600 | 8 |— |5 | | | |8 |4,800 |10 |2 |— | | | | |TOTAL |81 |14 |12 |

| | |Cost |Calculation |Amount | | | |Regular wages |($7,200 per quarter)(81) |$583,200 | | | |Hire costs |($10,000 per hire)(14 hires) |140,000 | | | |Layoff costs |($4,000 per hire)(12 fires) |48,000 | | | | |TOTAL |$771,200 |

c.Proposed plan

| | |Quarter |Demand (hr) |Workforce |Hires |Fires |Overtime (hr) | | | |1 |4,200 | 9...
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