Month 1 2 3 4 Demand 8 10 13 Month 6 7 8 Demand 18 20 20 14 Month 9 10 11 12 Demand 12 8 2 1
Tax Prep Advisers, Inc., has
requirements for tax preparation associates over the next
12 months. Management would like three alternative staffing
plans to be developed. The company currently 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 overtime capac-
ity. Regular-time wages are $1,500 per month, and overtime
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.
a. Prepare 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.
b. Using a chase strategy, prepare a plan that is consistent with
the constraint on hiring and minimizes use of overtime.
c. Prepare a mixed strategy in which the workforce level is
slowly increased by two employees per month through
month 5 and is then decreased by two employees per
month starting in month 6 and continuing through month
12. Does this plan violate the hiring or overtime con-
straints set the company?
d. Contrast these three plans on the basis of annual costs
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