The mix strategy has the potential to be more cost-effective than both level and chase strategies. It balances the cost of hiring/layoffs with the cost of overtime/undertime.
Workforce Planning for Streets Maintenance Division
a. Level Workforce Plan with Overtime and Minimum Undertime:
Regular Time:
Total hours needed: 8,000 + 14,000 + 29,000 + 18,000 = 69,000
Regular-time capacity per worker: 15 workers * 500 hours/quarter = 7,500 hours/quarter
Number of workers needed: 69,000 / 7,500 = 9.2 quarters
Hire additional workers: 15 current workers + 5 new workers = 20 workers
Overtime:
Maximum overtime per quarter: 0.2 * 7,500 = 1,500 hours/quarter
Unused regular-time capacity per worker: 500 - 416.67 = 83.33 hours/quarter
Overtime hours: 8,000 - 20 * 416.67 = 3,333.33 hours/quarter
Total overtime cost: 3,333.33 * $21 = $70,000/quarter
Undertime:
Undertime per worker: 83.33 hours/quarter
Total undertime cost: 20 * 83.33 * $14 = $23,333.33/quarter
Total cost:
Hiring cost: 5 workers * $3,500 = $17,500
Layoff cost: 0
Regular payroll: 20 workers * $7,000 = $140,000/quarter
Overtime cost: $70,000/quarter
Undertime cost: $23,333.33/quarter
Total cost per quarter: $250,833.33
Total cost for 4 quarters: 4 * $250,833.33 = $1,003,333.32
b. Chase Strategy with Variable Workforce Levels:
Quarter 1:
Workers needed: 8,000 / 500 = 16 workers
Quarter 2:
Workers needed: 14,000 / 500 = 28 workers
Hire additional workers: 28 - 16 = 12 workers
Quarter 3:
Workers needed: 29,000 / 500 = 58 workers
Hire additional workers: 58 - 28 = 30 workers
Quarter 4:
Workers needed: 18,000 / 500 = 36 workers
Lay off workers: 58 - 36 = 22 workers
Cost Breakdown:
Hiring cost: 36 workers * $3,500 = $126,000
Layoff cost: 22 workers * $2,800 = $61,600
Regular payroll: Variable depending on workforce size
No overtime or undertime
Total cost for 4 quarters: $187,600 + variable regular payroll
c. Mix Strategy:
Combine elements of level and chase strategies.
Maintain a base workforce of 20 workers (level).
Use overtime for fluctuations exceeding the base capacity.
This approach balances the cost of hiring/layoffs with the cost of overtime/undertime.
Comparison of Plans:
Plan Total Cost Advantages Disadvantages
Level with Overtime & Undertime $1,003,333.32 Minimizes layoffs and undertime High overtime cost
Chase with Variable Workforce $187,600 + variable regular payroll Lower overall cost than level Requires frequent hiring/layoffs
Mix Varies depending on overtime usage Balances cost of hiring/layoffs with overtime/undertime Requires more complex planning and management
Mix Strategy Evaluation:
The mix strategy has the potential to be more cost-effective than both level and chase strategies. It balances the cost of hiring/layoffs with the cost of overtime/undertime.