The Prep Advisors, Inc., has forecasted the following staffing requirements for tax preparation associates over the next 12 months. Management would like three alternative staffing plans to be developed.
The company currenlty has 10 associates. No more than 10 new hires can be accommodated in any month because of limited training facilities. No backorders are allowed, and overtime cannot exceed 25 percent of regular-time capacity on any month. There is no cost for unused ovetime capacity. Regular-time wages are $1,500 per month, and ovetime wages are 150 percent of regular-time wages. Undertime is paid at the same rate as regular time. The hiring cost is $2,500 per person, and the layoff cost is $2,000 per person.
- Provide a staffing plan utilizing a level workforce strategy, minimizing undertime. The plan may call for a one-time adjustment of the workforce before month 1.
- Using a chase strategy, provide a plan that is consistent with the constraint of hiring and minimizes use of overtime.
- Contraxt these two plans on the basis of annual costs.
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