Solutions to practice problems Chapter 14

2.

Bob Carltons Golf Camp

a. The level strategy:
The peak demand is 6,400 hours in quarter 2. As each employee can work 600 hours per
quarter (480 on regular time and 120 on overtime), the level workforce that covers
requirements and minimizes undertime is 6,400/600 = 10.67 or 11 employees.
Cost
Regular wages
Overtime wages*

Calculation
($7200 per quarter)(11)(8 quarters)
(1,120 hr in quarter 2)($20 per hr)
(960 hr in quarter 6)($20 per hr)
($10,000 per hire)(3 hires)
TOTAL

Hire costs
*

Amount
$633,600
22,400
19,200
30,000
$705,200

The 11 workers can produce (11) (480) = 5,280 hours of regular time in any quarter. The 6,400-hour
requirement in quarter 2 exceeds this amount by 1,120 hours. The 6,240-hour requirement in quarter 6
exceeds this amount by 960 hours.

The total undertime hours can be calculated as:

Quarter 1
11(480) 4,200
1,080 hours
Quarter 3
11(480) 3,000
2,280
Quarter 4
11(480) 4,800
480
Quarter 5
11(480) 4,400
880
Quarter 7
11(480) 3,600
1,680
Quarter 8
11(480) 4,800
480
6,880 hours
b. The chase strategy:
Quarter
1
2
3
4
5
6
7
8

Demand (hr)
4,200
6,400
3,000
4,800
4,400
6,240
3,600
4,800
TOTAL

Cost
Regular wages
Hire costs
Layoff costs

Workforce
9
14
7
10
10
13
8
10
81

Hires
1
5

Layoffs
7

3
3

5
0
12

2
14

Calculation
($7,200 per quarter)(81)
($10,000 per hire)(14 hires)
($4,000 per layoff)(12 layoffs)
TOTAL

Amount
$583,200
140,000
48,000
$771,200

c. Proposed plan:
This plan begins with just 9 workers for Quarter 1, as with the chase strategy. However,
it increases temporarily the workforce to 11 employees in Quarters 2 and 6, making up
the shortfall with overtime.
Quarter
1

Demand (hr)
4,200

Workforce
9

Hires
1

Layoffs

Overtime (hr)

2
3
4
5
6
7
8

6,400
3,000
4,800
4,400
6,240
3,600
4,800
TOTAL

11
9
9
9
11
9
9
76

Cost
Regular wages
Hire costs
Layoff costs
Overtime

1,120
2

480
80
960

2
2
0
4

0
5

Calculation
($7,200 per quarter)(76)
($10,000 per hire)(5 hires)
($4,000 per layoff)(4 layoffs)
($20 per hour)(3,120 hours)
TOTAL

480
3,120
Amount
$547,200
50,000
16,000
62,400
$675,600

This plan is more like the level strategy, except that only 9 employees are on the workforce
each quarter, with another 2 hired temporarily in Quarters 2 and 6. It also uses more
overtime than with the level strategy.
3.

Bob Carltons Golf Camp with part-time instructors

a. One of many plans that take advantage of flexibility provided by part-time instructors,
this plan reduces hiring and layoffs of certified instructors, reduces overtime, and reduces
total costs.
Qtr
1
2
3
4
5
6
7
8

Demand
(hr)
4,200
6,400
3,000
4,800
4,400
6,240
3,600
4,800
TOTAL

Certified
Workforce
9
10
8
8
8
10
8
8
69

Cert
Hires
1
1

Cost
Regular wages
Cert. hire costs
Cert. layoff costs
PT. hire costs
PT. labor costs
Overtime

6.

Cert
PT
Layoffs Work Hours

PT
Hires

720

720
560
720

720
3,440

3
9

PT
Overtime
Layoffs
(hr)
880

240
720

240
2,080

Calculation
($7,200 per quarter)(69)
($10,000 per hire)(4 hires)
($4,000 per hire)(4 layoffs)
($2,000 per hire)(9 hires)
($12/hr) (3,440 hrs)
($20 per hour)(2,080 hours)
TOTAL

Amount
$496,800
40,000
16,000
18,000
41,280
41,600
$653,680

Flying Frisbee Company

a. Level strategy
The most overtime we can use is 25% of regular-time capacity (W), so we have
1.25W = 20 employees (maximum need in any period)
W = 20/1.25 = 16 employees
This staff size minimizes the resulting amount of undertime. As there are already 10
employees, Flying Frisbee should hire 6 more. Plan 1 shows the resulting hires and
overtime.
Plan 1: Level Strategy
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Requirement
Staff level
Hires
Layoffs
Overtime

2
16
6

2
16

4
16

6
16

18
16

20
16

12
16

18
16

7
16

3
16

2
16

1
16

95
192
6
0
8

b. Modified chase strategy

This strategy simply involves adjusting the workforce as needed to meet demand. Plan 2
shows the effect of changing the staff level with hires and layoffs. Note that the
maximum number of hires per period is 10, so that Flying Frisbee can hire only 10
workers in May and must use 2 worker months of overtime to fulfill labor requirements
for that month.
Plan 2: Modified chase strategy
Requirement
Staff level
Hires
Layoffs
Overtime

Jan
2
2

Feb
2
2

Mar
4
4
2

Apr
6
6
2

May
18
16
10

Jun
20
20
4

Jul
12
12

Aug
18
18
6

Sep
7
7

11

Oct
3
3

Nov
2
2

Dec
1
1

Total
95
93
24
33
2

c. Plan 3: Mixed strategy for Flying Frisbee Company

This plan begins with a workforce of 4 employees for the first three months. It increases
the workforce during the peak season, but not as much as in Plan 2, covering shortfalls
with overtime.
Requirement
Staff level
Hires
Layoffs
Overtime

Jan
2
4

Feb
2
4

Mar
4
4

Apr
6
6
2

May
18
16
10

Jun
20
16

Jul
12
14

Aug
18
14

Sep
7
7

Oct
3
3

Nov
2
2

Dec
1
1

Total
95
91
12
21
10

d. Cost comparisons for the Flying Frisbee Company staffing plans

Cost
RT @ $1500
OT @ $2,250
Hire @ $2,500
Layoff @ $2,000

Plan 1: Level Strategy

192 wrk-mo.
=
8 worker-mo.
=
6 workers
=
0 workers
=
Total

Plan 2: Chase Strategy

93 worker-mo.
=
2 worker-mo.
=
24 workers
=
33 workers
=

$288,000
$ 18,000
$ 15,000
$
0
$321,000

$139,500
$ 4,500
$ 60,000
$ 66,000
$270,000

Plan 3: Mixed Strategy

91 worker-mo.
=
10 worker-mo.
=
12 workers
=
21 workers
=

$136,500
$ 22,500
$ 30,000
$ 42,000
$231,000

The mixed strategy is most cost effective and requires less hiring and layoffs than does
the chase strategy. The advantages of the level plan include a stable workforce and
excess capacity to meet increases in demand. The disadvantage of a level plan is greater
cost than for a mixed strategy. The disadvantage of a chase strategy is the frequent
changes in staff level.
11.

16.

Using Excel model,

The number of employees is 7. They are scheduled to take the boxed days off.
Hickory Company
a. Schedules for two rules
FCFS rule:
Customer
Sequence

Hr Since
Order
Arrived

Start
Time
(hr)

Machine
Time
(hr)

Finish
Time
(hr)

Due
Date
(hr)

Past
Due
(hr)

Flow
Time
(hr)

10

10

12

16

10

13

18

13

15

28

18

10

31

28

37

20

17

38

37

44

21

23

44

Average flow time =

16 18 31 38 44
= 29.4 hours
5

Average hours past due =

0 5 10 17 23
= 11.0 hours
5

EDD rule:
Customer
Sequence

Hr Since
Order
Arrived

Start
Time
(hr)

Machine
Time
(hr)

Due
Date
(hr)

Hr
Past
Date

Flow
Time
(hr)

10

13

12

19

13

15

28

18

10

31

28

37

20

17

38

37

44

21

23

44

Average flow time =

Average hours past due =
b.

Finish
Time
(hr)

8 19 31 38 44
= 28.0 hours
5
0 1 10 17 23
= 10.2 hours
5

The EDD rule is better than FCFS on both average flow time (28.0 vs. 29.4) and average
hours past due (10.2 vs. 11.0). It gives the better schedule, although this is not always
true.