Nas (Pvt) Ltd has recently faced considerable variability in demand. The company is evaluating two short...
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Nas (Pvt) Ltd has recently faced considerable variability in demand. The company is evaluating two short term capacity modification strategies; i.e changing inventory levels and varying workforce. The following information is available for the first quarter of 2020. January February March April 2,500 2,500 2,000 19 21 20 Demand forecast No of working days 2,000 22 Other information is as follows. Opening stock-January Labor hours required Working hours per day No of employees at the beginning Labor cost/hour (Rs) 200 units 2 hrs/unit 8 hours 26 100 5,000 10,000 Cost of hiring & training/person (Rs) Cost of layoff/person (Rs.) Stock holding cost/per unit-per month10 (Rs) Stock out cost/unit (Rs) 15 Required: Evaluate the following options for the quarter ending March 2x20 and recommend the best course of action. Option A): Company changes the workforce in the short term capacity planning. (Assume closing stock requirement is 20% of next month demand) Option B): Company changes the stock level while keeping a stable workforce. Nas (Pvt) Ltd has recently faced considerable variability in demand. The company is evaluating two short term capacity modification strategies; i.e changing inventory levels and varying workforce. The following information is available for the first quarter of 2020. January February March April 2,500 2,500 2,000 19 21 20 Demand forecast No of working days 2,000 22 Other information is as follows. Opening stock-January Labor hours required Working hours per day No of employees at the beginning Labor cost/hour (Rs) 200 units 2 hrs/unit 8 hours 26 100 5,000 10,000 Cost of hiring & training/person (Rs) Cost of layoff/person (Rs.) Stock holding cost/per unit-per month10 (Rs) Stock out cost/unit (Rs) 15 Required: Evaluate the following options for the quarter ending March 2x20 and recommend the best course of action. Option A): Company changes the workforce in the short term capacity planning. (Assume closing stock requirement is 20% of next month demand) Option B): Company changes the stock level while keeping a stable workforce.
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