Production schedule

Jul-Sep Oct-Dec Jan-Mar Apr-Jun

Model Q1 Q2 Q3 Q4 Total
101 5551 3629 4296 9180 22656
102 5551 3629 4296 9180 22656
103 16653 13131 8400 29784 67968
Total 27755 20389 16992 48144 113280

Maximum capacity per Qr

No. of Manhours needed to
Model No. of units produce max units
101 9200 3036
102 9200 3036
103 30000 12000
Total 18072

No. of employees 21
Prouctivity 82%
Possible increase in productivity 4%

Manhours required to meet the schedule

Productivity @ 82%
Q1 Q2 Q3 Q4 Total Q4 @86%
101 2234 1460 1729 3694 9118 3523
102 2234 1460 1729 3694 9118 3523
103 8123 6405 4098 14529 33155 13853
Total 12591 9326 7555 21918 51390 20898

Manhours available
No. of days 92 92 90 91 365
Working hours 15456 15456 15120 15288 61320
Nett working hrs 15070 15301 14893 14982 60246
(after deducting absenteeism)

Observations & Discussion Questions

1
Q1,2 and 3 have no capacity constraints.
In Q4, the manhours required are 21918 while available manhours are 14982 only, i.e. a gap of 6935 hours
There are three options -
Step 1 Increased productivity It still leaves a gap of 5916 hours.
Step 2 Advance production Produce in Q3, where excess capacity is available. This will lead to Inventory ca
Pay overtime Produce in Q4 by paying overtime wages. This will lead to increased production
Employ extra people No. of people required = 5916/(91*8*98%) = approx 8 persons; but this will have

One must compare the above three options with respect to costs to arrive upon the most optimum solutio
2
Overall surplus hours 8856
Overall surplus people 3

Q1 Q2 Q3 Q4 Q4@86%
Surplus hours 2478 5975 7338 -6935 -5916
Surplus people 3.37 8.12 10.19 -9.53 -8.13
Actual people reqd 17.63 12.88 10.81 30.53 29.13
 Standard Labor Hours

Hours
101 0.33
102 0.33
103 0.40

Absenteeism

Qr % of hrs
1 2.5
2 1.0
3 1.5
4 2.0

Wage rate
$ per hr
standard 6.5
overtime @ 150% 9.75
Fringe benefits @ 15% 0.975
Standard workday 8 hr
avg wage perday 59.8 $

only, i.e. a gap of 6935 hours

pacity is available. This will lead to Inventory carrying cost.

me wages. This will lead to increased production cost but no inventory carrying cost.
1*8*98%) = approx 8 persons; but this will have addl cost of recruitment and lay-off

o costs to arrive upon the most optimum solution.