2 Planning StepsCalculate the existing available skilled and unskilled workersCase states that company has sufficient workers to make the annual forecast over 200 production days (2010)-levelSo calculate average need for each product at each skill levelDetermine the Labor actually needed to fill demand (March-August)Determine the total cost of fulfilling demand for each option by figuring cost of:OvertimeUse of subcontractorsHiring and Training workersCost of Design ChangeCost of Carrying Inventory
3 Calculate Available Workers Based on Forecast 2010 dataData From TemplateSufficient Capacity to produce Annual Forecast with 200 production days in 2010Workers work 10 hour daysCapacity to produce:524,280 Cloudchairs306,916 AlStrong253,570 Green ComfortStaffing =labor time * Daily Capacity/ (daily hours/worker *yield)Example: Cloud Chair w/ Skilled(2 min/item)(hr/60min)*( ch/day)/ (10 hours/day/worker)*.95= 9.2 workersRequiredLaborDaily CurrentCapacityCurrentStaffing LevelMins/item=yearly/ 200 daysSkilledUnskilledCloudChair292,621.49.2?AlStrong12.8281,534.634.5GreenComfort13311,267.928.9Total Skilled Workers = 73Total Unskilled Workers=?
4 Determine Labor Hours Needed (March) Calculate hours for eachCategoryData From TemplateStaffing =labor time * Daily Demand/ (yield)Example: Cloud Chair w/ Skilled(2min/item)(hr/60min)*(2500 ch/day)/.95= worker hours/dayOr (per 18 days)= worker hours/day *18= hoursRequiredLabor per productMarch ForecastLabor hours neededMins/itemDaily(18 days)MonthlySkilledUnskilledUnskilledCloudChair2925001578.9?AlStrong12.82815006063.2GreenComfort133112605172.6
6 Tackling the shortages & surpluses Average all the required people per month for 6 months gives:13 additional skilled & 40 unskilledOr don’t hire until April and Use excess worker capacity to build inventory in March then average the remaining demand over 5 months.
7 Consider other options (at least 2) Overtime. What is the additional labor cost?Subcontract. Frees up skilled labor hours and some unskilled hours, still need to hire some.HiringEarly hiring in March with carrying extra inventoryHiring in April with carrying extra inventoryHiring and Training in MarchChange in DesignHire all workers March 1 and use overtime for someHire all needed workers in AprilHire unskilled workers to train in March and start extra production in April