Cost data
Regular-time labor cost per hour $10.00
Overtime labor cost per hour $15.00
Subcontracting cost per unit (labor only) $84.00
Holding cost per unit per period $10.00
Back-order cost per unit per period $20.00
Hiring cost per employee $600.00
Firing cost per employee $450.00
Capacity data
Beginning workforce 210 employees
Beginning inventory 400 units
Labor standard per unit 6 hours
Regular time available per period 160 hours
Overtime available per period 32 hours
Subcontracting maximum per period 1000 units
Subcontracting minimum per period 500 units
Demand data
Period 1 6000 units
Period 2 4800 units
Period 3 7840 units
Period 4 5200 units
Period 5 6560 units
Period 6 3600 units
Jill Nicholas is concerned about BackPack’s corporate image and has decided against using hires and fires. Instead, she has asked you to consider a chase aggregate plan using the current workforce supplemented by either overtime or undertime to change capacity to match demand exactly. She has asked for the following information from you:
(a) How many production hours would be required each period to produce the exact quantity needed?
(b) How many regular-time production hours are available each period?
(c) How many overtime production hours would be needed each period?
(d) Show what would happen if this plan were implemented.
(e) Calculate the costs associated with this plan.
(f) Evaluate the plan in terms of cost, customer service, operations, and human resources.