A manufacturing site is asking you to plan workforces and production levels for

Question

A manufacturing site is asking you to plan workforces and production levels for next year's January to April. The forecasted demand and working days of each month is shown in the table below. In the beginning of January there are 50 workers employed and 160 units in the inventory. The inventory cost of each unit is 70 TL/month. Hiring cost of each worker is 600 TL, firing cost of each worker is 1000 TL and the daily payment of a worker is 60 TL. The production rate is estimated to be 2 units per worker-day. For the hybrid strategy assume 25 workers, overtime cost of 40 TL/unit, maximum overtime capacity of 30% and a subcontract cost of 45 TL/unit. Choose the best among Chase and Hybrid strategies. Explain why level strategy is resulting in such a high cost.

Explanation / Answer

Inventory Cost          1,200            84,000          2,100          147,000             900            63,000             850            59,500          353,500 Hiring Cost            30,000            30,000 600*50 Firing Cost            50,000            50,000 1000*50 Employee Payment 23            69,000 24            72,000 25            75,000 24            72,000          288,000 Production Cost 23              2,300 24              2,400 25              2,500 24              2,400              9,600 Total Cost          731,100

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