OTM 745- Supply Chain management Assignment

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Question 1:
Bob Carlton’s golf camp estimates the following workforce requirements for its services over the next 2 years.
Each certified instructor puts in 480 hours per quarter regular time and can work an additional 120 hours overtime.
Regular-time wages and benefits cost Carlton $7,200 per employee per quarter for regular time worked up to 480
hours, with an overtime cost of $20 per hour.

Quarter 1 2 3 4
Demand (hours) 4,200 6,400 3,000 4,800
Quarter 5 6 7 8
Demand (hours) 4,400 6,240 3,600 4,800

Unused regular time for certified instructors is paid at $15 per hour. There is no cost for unused overtime capacity.
The cost of hiring, training, and certifying a new employee is $10,000. Layoff costs are $4,000 per employee.
Currently, eight employees work in this capacity.
a. Find a workforce plan using the level strategy that allows for no delay in service. It should rely only on overtime
and the minimum amount of undertime necessary. What is the total cost of this plan?
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 better plan and calculate its total cost

Question 2:
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 workforce 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.

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 OTM 745- Supply Chain management Assignment
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Question 3:
Tampa’s Soda Pop Inc. has a new fruit drink for which it has high hopes. Don Hammond, the production planner, has
assembled the following cost data and demand forecast.
Previous quarter’s output = 1300 cases
Quarter Demand
Beginning inventory = 0 cases
1 1800 Stockout cost = $150 per case
2 1100 Inventory holding cost = $40 per case at end of quarter
3 1600 Hiring employees = $40 per case
4 900 Terminating employees = $80 per case
Subcontracting cost = $60 per case
Unit cost on regular time = $30 per case
Overtime cost = $15 extra per case
Capacity on regular time = 1800 cases per quarter
Don’s job is to develop an aggregate plan. The three initial options are:
a) Plan A: A chase strategy that hires and fires personnel as necessary to meet the forecast.
b) Plan B: A level strategy.
c) Plan C: A level strategy that produces 1,200 cases per quarter and meets the forecasted demand with
inventory and subcontracting.
d) Can you devise a better strategy?

Question 4:
Bell Computer Corp. needs an aggregate plan for July through December for its DVD production. The company has
developed the following data:
Quarter Demand
Demand Forecast
Holding cost $8/DVD/month
Month Demand Work days
Subcontracting $80/DVD
July 400 21
Regular-time labor $12/hour
Aug 500 22
Overtime labor $18/hour for hours above
Sept 550 20
Normal work day 8 hours/worker/day
Oct 700 21
Hiring cost $40/DVD
Nov 800 20
Layoff cost $80/DVD
Dec 700 16
Stockout cost None

Other Data
Current workforce (June) 8 people
Labor hours/DVD 4 hours
Beginning Inventory 0 DVD

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 OTM 745- Supply Chain management Assignment
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What will each of the following strategies cost?

Question 5:
Lisa Galbraith, operations manager at Tallahassee furniture, has received the following estimates of demand
requirements:
Apr May Jun July Aug Sep
1,000 1,200 1,400 1,800 1,800 1,600

Assuming stockout costs for lost sales of $100 per unit, inventory carrying costs of $25 per unit per month, and zero
ending inventory, evaluate the following plans:
a) Plan A. Produce at a steady (equal to minimum requirements) of 1,000 units per month and subcontract
additional units at a $60 per unit premium cost.
b) Plant B. Vary the workforce, which performs at a current production level of 1,300 units per month. The
cost of hiring additional workers is $ 3,000 per 100 units produced. The cost of layoffs is $6,000 per 100
units cut back.
c) Plan c. Keep the current workforce steady at a level producing 1,300 units per month. Subcontract the
remainder to meet demand. Assume 300 units remaining from March are available in April.
d) Plan D. Keep the current workforce at a level capable of producing 1,300 units per month. Permit a
maximum of 20% overtime at a premium of $40 per unit. Assume that warehouse limitations permit no
more than a 180-unit carryover from month to month. This plan means that anytime inventories reach 180,
the plant is kept idle. Idle time per unit is $60. Any additional needs are subcontracted at a cost of $60 per
incremental unit.

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