Aggregate Production and Hires/Fires
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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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