This document provides demand forecasts and cost data to calculate staffing levels and costs for a manufacturing company under different production planning strategies. It asks the reader to determine the number of employees needed each quarter under a chase demand and level capacity strategy, calculate overtime production costs and total costs for a specified level capacity plan using 14 employees each quarter.

1. Problem 6 - Based on the data provided in the table below is
this new forecasting technique biased? If so how is it biased?
Calculate tracking signal values. Is there any evidence this
New Forecast should not be used?
Actual
New
Period
Demand
Forecast
1
630
810
2

2. 765
700
3
770
700
4
860
705
5
910
740
6

3. 740
810
7
750
820
8
815
1000
9
1250
850
10

4. 1360
1285
11
1430
1450
12

5. The owner of a small mill-working plant that builds cabinets is
developing his aggregate plan for the next year. The relevant
cost data and forecast for the next 4 quarters is provided below.
The company currently has 12 employees and works one 8 hour
shift each day with 2 paid 15 minute breaks. Assume each
quarter has 65 working days, and that it currently has no units
in stock. Use this information and the information from the
table to answer the questions below.
Costs
Forecast
Other Data
Holding Cost/Unit/Quarter
$25.00
Qtr 1
1500
Labor Hours/Unit
4.5
Hiring Cost
$2,500.00
Qtr 2
1200
Beginning Inventory
0
Layoff Cost
$3,500.00
Qtr 3
2100
Subcontract Cost
$135.00
Qtr 4
1650

6. Avg. Labor Cost/Hour
$18.00
Overtime Labor Cost/Hour
$27.00
Part I
1) If the company used a chase demand startegy and rounded
any fractional number of employees to the nearest whole
number, how many employees would be used in each quarter?
2) If the company used a level capacity strategy and rounded
any fractional number of employees to the nearest whole
number, how many employees would be used?
Period
1
2
3
4

7. Forecast
1500
1200
2100
1650
Hours Req.
Workers Req.
Workers Used

8. Part II
Assume the company wants to use a Level Capacity Strategy
with 14 employees (Round the Production in each period to the
nearest whole number). In any period where on-hand inventory
and production do not meet demand the company would
supplement with overtime production. Use the table below to
calculate the total costs associated with using this plan.
Q3) What would the overtime production cost be for this plan?
Q4) What would theTotal Cost be for this plan?

9. Level Capacity Aggregate Plan
Period
1
2
3
4
Forecast
1500
1200
2100
1650

10. Workers Used
14
14
14
14
Hire/(Fire)
Production
Production - Forecast

11. Beginning Inventory
Ending Inventory
Average Inventory
Overtime Production
Total Cost

12. Hiring Cost
Firing Cost
Reg. Output
O.T.

13. Subcontract
Inventory
Backorder
Total Cost:

14. Total Cost For Plan
1200

15. 850