Ch14 -RISK MGT_PracticeProblems_Keys.docx - Ch14 2 a Bob...

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Ch14 2. Bob Carlton’s 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 Calculation Amount Regular wages ($7200 per quarter)(11)(8 quarters) $633,600 Overtime wages * (1,120 hr in quarter 2)($20 per hr) 22,400 (960 hr in quarter 6)($20 per hr) 19,200 Hire costs ($10,000 per hire)(3 hires) 30,000 TOTAL $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 Demand (hr) Workforce Hires Layoffs 1 4,200 9 1 2 6,400 14 5 3 3,000 7 7 4 4,800 10 3 5 4,400 10 6 6,240 13 3 7 3,600 8 5 8 4,800 10 2 0 TOTAL 81 14 12 Cost Calculation
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