Jill Nicholas is concerned about BackPack’s corporate image and has decided agai

Question

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.

Problem Data Cost data Regular-time labor cost per hour Overtime labor cost per hour Subcontracting cost per unit (labor only) Holding cost per unit per period Back-order cost per unit per period Hiring cost per employee Firing cost per employee $10.00 $15.00 $10.00 $20.00 $600.00 $450.00 Beginning inventory Labor standard per unit Regular time available per period Overtime available per period Subcontracting maximum per period Subcontracting minimum per period 210 employees 400 units 6 hours 160 hours 2 hours 1000 units 500 units Demand data Period 1 Period 2 Period 3 Period 4 Period 5 6000 units 4800 units 7840 units 5200 units 6560 units 3600 units

Explanation / Answer

1. Production hour requirement

Period 1 - Units needed = (6000-400) = 5600

Hours required = 5600x6 = 33600

similarly for other periods

b. Regular production hours available

210x160 = 33600

Hence availability in different periods

c. Overtime available = 32x210 = 6720

Availability of overtime period wise

d. As per plan only period 3 will need more work hours as even after utiliing overtime, we need 6720 more hours to produce the desired quantity. In rest of the periods requirement can be met by regular time + overtime. In period 3, maximum hours that can be subcontracted are 1000x6 =6000 hours. As there is no more production options, remaining 720 units will have to be purchased from outside.

Period Units needed Time needed 1 5600 33600 2 4800 28800 3 7840 47040 4 5200 31200 5 6560 39360 6 3600 21600

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