The Barberton Municipal Division of Road Maintenance is charged with road repair
ID: 430594 • Letter: T
Question
The Barberton Municipal Division of Road Maintenance is charged with road repair in the city of Barberton and the surrounding area. Cindy Kramer, road maintenance director, must submit a staffing plan for the next year based on a set schedule for repairs and on the city budget. Kramer estimates that the labor hours required for the next four quarters are 6,000, 12,000, 19,000, and 9,000, respectively. Each of the 11 workers on the workforce can contribute 500 hours per quarter. Payroll costs are $6,000 in wages per worker for regular time worked up to 500 hours, with an overtime pay rate of $18 for each overtime hour. Overtime is limited to 20 percent of the regular-time capacity in any quarter. Although unused overtime capacity has no cost, unused regular time is paid at $12 per hour. The cost of hiring a worker is $3,000, and the cost of laying off a worker is $2,000. Subcontracting is not permitted.
a. Find a level staffing plan that relies just on overtime and the minimum amount of undertime possible. Overtime can be used to its limits in any quarter. What is the total cost of the plan and how many undertime hours does it call for?
b. Use a chase strategy that varies the workforce level without using overtime or undertime. What is the total cost of this plan?
c. Propose a plan of your own. Compare your plan with those in part (a) and part (b) and discuss its comparative merits
Explanation / Answer
a. Find a level staffing plan that relies just on overtime and the minimum amount of undertime possible. Overtime can be used to its limits in any quarter. What is the total cost of the plan and how many undertime hours does it call for?
Labour cost for regular hours=6000/500=$12 per hour
Labour cost for under-time=$12 per hour
Labour cost for overtime=$18 per hour
Hiring cost=$3000 per worker
Firing cost=$2000 per worker
Level strategy
Level strategy is about keeping workforce constant while varying the utilization of the capacity available to meet the demand.
Here the number of workers depends upon the peak season. We have to hire find the number of workers to be used so that their total capacity is able to meet the demand during peak season
Regular time capacity + overtime capacity= labour hrs demand during peak season
1.2 * regular time capacity= 19000
1.2 * (500*number of regular workers) = 19000
Number of regular workers= 31.66666667 or 32 workers
Regular time capacity available with 32 employees =32*500=16000
We have 11 workers with us. So we hire 21 more workers to get the 32 number
We utilize the regular time required for the demand. If the demand is higher than the regular time capacity, we use overtime.
Under-time is time that is not utilized in regular capacity
Total cost of the plan - $ 885000
Total under time hours - 21000
LEVEL STRATEGY
Quarter
1
2
3
4
Total
Forecasted demand(hrs)
6000
12000
19000
9000
46000
Workforce level
32
32
32
32
128
Under-time
10000
4000
0
7000
21000
Overtime
0
0
3000
0
3000
Utilized time
6000
12000
16000
9000
43000
Hires
21
0
0
0
21
Layoffs
0
0
0
0
0
COSTS
Under-time
120000
48000
0
84000
252000
Overtime
0
0
54000
0
54000
Utilized time
72000
144000
192000
108000
516000
Hires
63000
0
0
0
63000
Layoffs
0
0
0
0
0
885000
b. Use a chase strategy that varies the workforce level without using overtime or under-time. What is the total cost of this plan?
Here we vary the level of workforce to meet the demand
The number of workers required each period
= Demand during the period/ Regular time capacity
= Demand during the period/ 500
Under-time and over time as workforce hired meets demand.( But in some other cases, sometimes workforce hired may have slightly greater capacity and hence there may be under time
Hiring and firing are done accordingly, if the workforce required in current period is greater than or less than the workforce in previous period
Total cost of this plan =$673000
CHASE STRATEGY
Quarter
1
2
3
4
Total
Forecasted demand(hrs)
6000
12000
19000
9000
46000
Workforce level
12
24
38
18
92
Under time
0
0
0
0
0
Overtime
0
0
0
0
0
Utilized time
6000
12000
19000
9000
46000
Hires
1
12
14
0
27
Layoffs
0
0
0
20
20
COSTS
Under time
0
0
0
0
0
Overtime
0
0
0
0
0
Utilized time
72000
144000
228000
108000
552000
Hires
3000
36000
42000
0
81000
Layoffs
0
0
0
40000
40000
673000
c. Propose a plan of your own. Compare your plan with those in part (a) and part (b) and discuss its comparative merits
I have chosen a mixed strategy. Here i have tried to minimize the number of workforce hired during the third quarter so that hiring this quarter and firing next quarter is less.
As we know from level strategy, that we can manage the third quarter with 32 workers. Hence we have used only 32 workers in third quarter and utilize overtime
This plan requires les hiring and firing and decrease total costs
MIXED STRATEGY
Quarter
1
2
3
4
Total
Forecasted demand(hrs)
6000
12000
19000
9000
46000
Workforce level
12
24
32
18
86
Under time
0
0
0
0
0
Overtime
0
0
3000
0
3000
Utilized time
6000
12000
16000
9000
43000
Hires
1
12
8
0
21
Layoffs
0
0
0
14
14
COSTS
Under time
0
0
0
0
0
Overtime
0
0
54000
0
54000
Utilized time
72000
144000
192000
108000
516000
Hires
3000
36000
24000
0
63000
Layoffs
0
0
0
28000
28000
661000
LEVEL STRATEGY
Quarter
1
2
3
4
Total
Forecasted demand(hrs)
6000
12000
19000
9000
46000
Workforce level
32
32
32
32
128
Under-time
10000
4000
0
7000
21000
Overtime
0
0
3000
0
3000
Utilized time
6000
12000
16000
9000
43000
Hires
21
0
0
0
21
Layoffs
0
0
0
0
0
COSTS
Under-time
120000
48000
0
84000
252000
Overtime
0
0
54000
0
54000
Utilized time
72000
144000
192000
108000
516000
Hires
63000
0
0
0
63000
Layoffs
0
0
0
0
0
885000
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