The quarterly demand for a product(in units) is given below: Quarters: Q1 Q2 Q3

Question

The quarterly demand for a product(in units) is given below:
Quarters: Q1 Q2 Q3 Q4
Demand: 800 1100 1400 1500   

Each unit of product requires 5 hours of labor. A worker works for 500 hours per.
quarter

Compute the number of workers required each quarter to meet demand?

No. of Workers, Q1 =

No. of Workers, Q2 =

No. of Workers, Q3 =

No. of Workers, Q4 =

Perform a rough-cut capacity planning analysis. Does the plant have the capacity to meet the total demand for the 4 quarters? Assume 6000 labor hours of capacity is available each quarter.

   Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4   Total     
Demand
(units)                         
Load
Labor hrs                         
Capacity
Labor Hrs.                         
Over/Under
                         
  
Note: Over/Under = Capacity - Load.

What is your recommendation?

Explanation / Answer

No. of workers in Q1 = 800*5/500.....(800 units * 5 hours per unit / 500 hours per worker)

= 8 workers

Similarly, No. of workers in Q2 = 1100*5/500 = 11 workers

No. of workers in Q3 = 1400*5/500 = 14 workers

No. of workers in Q4 = 1500*5/500 = 15 workers

Capacity available per quarter = 6000 labor hours

i.e. (6000 / 500) workers = 12 workers

Formulae:

There are excess labor hours available in Q1 & Q2, whereas shortfall in Q3 & Q4, the sum of excess labor in Q1 & Q2 is exactly equal to the sum of labor shortfall in Q3 & Q4. Hence the capacity should be fully utilised in all quarters and the excess production in Q1 & Q2 can meet the excess demand in Q3 & Q4.

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Demand (units) 800 1100 1400 1500 Load (labor hours) 4000 5500 7000 7500 Labor hours - capacity 6000 6000 6000 6000 Labor hours - (over / under) 2000 500 -1000 -1500

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