A retailer experiences a seasonal demand pattern for its services. Labor requirements over a typical six-month period follow.
Period 1 2 3 4 5 6
Requirement 7 8 9 11 12 7
Costs associated with operations are as follows:
Wages = $2,000 per worker per month
Hiring cost = $1,000 per worker
Layoff cost = $1,500 per worker
The current workforce level is 10 workers. Use the spreadsheet approach and the preceding data to answer the following questions:
a. What is the total cost of the staffing plan, including the cost of regular wages, hiring, and layoffs using a chase strategy with hiring and layoffs, but no overtime?
b. What is the total cost of the staffing plan, using a level strategy in which no overtime is allowed, and the under-time paid for?
c. Suppose that overtime is allowed up to 25% of the regular-time capacity, and that overtime wages are 150% of the regular-time rate. What is the total cost of the level strategy with overtime and under-time, which also minimizes under-time?
A new staffing plan is determined based on seasonal demand patterns.