FoldRite Furniture Approaches ISQA 459/559 Dr. Mellie Pullman

Planning Steps Calculate the existing available skilled and unskilled workers Case states that company has sufficient workers to make the annual forecast over 200 production days (2010)-level So calculate average need for each product at each skill level Determine the Labor actually needed to fill demand (March-August) Determine the total cost of fulfilling demand for each option by figuring cost of: Overtime Use of subcontractors Hiring and Training workers Cost of Design Change Cost of Carrying Inventory

Calculate Available Workers Based on Forecast 2010 data Data From Template Sufficient Capacity to produce Annual Forecast with 200 production days in 2010 Workers work 10 hour days Capacity to produce: 524,280 Cloudchairs 306,916 AlStrong 253,570 Green Comfort Staffing = labor time * Daily Capacity/ (daily hours/worker *yield) Example: Cloud Chair w/ Skilled (2 min/item)(hr/60min)*(2621.4 ch/day)/ (10 hours/day/worker)*.95 = 9.2 workers Required Labor Daily Current Capacity Current Staffing Level Mins/item =yearly/ 200 days Skilled Unskilled CloudChair 2 9 2,621.4 9.2 ? AlStrong 12.8 28 1,534.6 34.5 GreenComfort 13 31 1,267.9 28.9 Total Skilled Workers = 73 Total Unskilled Workers=?

Determine Labor Hours Needed (March) Calculate hours for each Category Data From Template Staffing = labor time * Daily Demand/ (yield) Example: Cloud Chair w/ Skilled (2min/item)(hr/60min)*(2500 ch/day)/.95 = 87.72 worker hours/day Or (per month @ 18 days) = 87.72 worker hours/day *18 =1578.9 hours Required Labor per product March Forecast Labor hours needed Mins/item Daily (18 days) Monthly Skilled Un skilled Unskilled CloudChair 2 9 2500 1578.9 ? AlStrong 12.8 28 1500 6063.2 GreenComfort 13 31 1260 5172.6

Determine Labor Hours Needed (March-August)   March April May June July August CloudChair 45,000 73,800 65,250 79,200 86,400 67,150 AlStrong 27,000 29,700 28,500 36,000 32,400 29,750 GreenComfort 22,680 25,200 22,500 27,900 21,250 Production days 18 15 17 Required skilled hours 12,815 15,006 13,821 Available skilled hours 13,140 10,950 Excess (shortfall) 325 (1,866) (2,871) Needed Skilled workers (2) 10 19 Required unskilled hours 32,703 39,947 36,539 Available unskilled hours 33,480 777 (6,467) (8,639) Needed unskilled workers (4) 36 58

Tackling the shortages & surpluses Average all the required people per month for 6 months gives: 13 additional skilled & 40 unskilled Or don’t hire until April and Use excess worker capacity to build inventory in March then average the remaining demand over 5 months.

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. Hiring Early hiring in March with carrying extra inventory Hiring in April with carrying extra inventory Hiring and Training in March Change in Design Hire all workers March 1 and use overtime for some Hire all needed workers in April Hire unskilled workers to train in March and start extra production in April