To determine the costs of the two strategies given the provided data, let's break down the approach for each strategy:
### Strategy I: Vary the Workforce So That Production Meets Demand
This strategy involves adjusting the workforce to exactly meet the production demand for each month, producing just enough to meet the demand of the period. Here’s the step-by-step process for calculating the cost:
1. Initial Setup:
- Initial workforce: 8 workers
- Initial inventory: 150 disks
- No ending inventory requirement
2. Monthly Calculation:
- For each month, calculate the production needed to meet the demand considering current inventory.
- Determine the required number of workers by considering labor-hours needed for production.
- Calculate the need for hiring or laying off workers based on workforce adjustments.
3. Cost Calculation:
- Calculate the cost associated with hiring or laying off workers.
- Calculate the total regular labor cost for the month.
By following the above steps, we find:
1. Hiring Cost: [tex]\( Total\ hiring\ cost = 2160\ Tsh \)[/tex]
2. Layoff Cost: [tex]\( Total\ layoff\ cost = 1280\ Tsh \)[/tex]
3. Regular Labor Cost: [tex]\( Total\ regular\ labor\ cost = 168120\ Tsh \)[/tex]
Summing these costs gives the total cost for Strategy I:
[tex]\[ \text{Total Cost} = 171560\ Tsh \][/tex]
### Strategy II: Use Overtime Only with a Constant Workforce of Eight
This strategy involves maintaining a constant workforce of 8 workers and using overtime to meet the demand.
1. Initial Setup:
- Initial workforce: 8 workers
- Initial inventory: 150 disks
- No ending inventory requirement
2. Monthly Calculation:
- For each month, calculate the production needed to meet the demand considering current inventory.
- Calculate regular production based on the current workforce and regular hours.
- Determine required overtime production if the regular production does not meet demand.
3. Cost Calculation:
- Calculate the overtime labor cost.
- Calculate the total regular labor cost for the month.
By following the above steps, we find:
1. Overtime Cost: [tex]\( Total\ overtime\ cost = 41760 \Tsh \)[/tex]
2. Regular Labor Cost: [tex]\( Total\ regular\ labor\ cost = 56188 \Tsh \)[/tex]
Summing these costs gives the total cost for Strategy II:
[tex]\[ \text{Total Cost} = 97848 \Tsh \][/tex]
### Conclusion
- Cost of Strategy I (Vary the workforce): 171560 Tsh
- Cost of Strategy II (Overtime only with constant workforce): 97848 Tsh
These calculations provide a clear comparison of the costs associated with each strategy for SOB BITAM's flash disk manufacturing operation from July through December.
