# Aggregate Production and Hires/Fires

Chapter 13, Problem 4

Although the BackPack Company has always used a level aggregate plan, Jill is interested in evaluating chase aggregate plans also. She has calculated how many hires and fires would be necessary to adjust capacity to meet demand exactly each period.

Use the following data to solve the problem.

Problem Data

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

Period 1 2 3 4 5 6 Total

Employees Needed 210 180 294 195 246 135 1260

Now Jill wants to see how the plan would actually work. You need to:

A. Show what would happen if this plan were implemented.

Plan Period

1 2 3 4 5 6 Total

Demand 4800 7840 5200 6560 3600

Employees

Hires

Fires

B. Calculate the costs associated with this plan.

Hiring Cost $

Firing Cost $

Regular-time labor Cost $

Total Cost $

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#### Solution Summary

The expert examines aggregate production and hires/fires.