7. On December 22, the finance VP informs the team that the cost of capital will be extremely high next year. As a consequence he asks the operations manager to develop a radically different type of sales and operations plan based on a chase strategy and the data from Problem 4.

Ending inventory is to be zero at the end of each quarter. The VP of manufacturing says he realizes this type of strategy will require him to abandon his beloved “level” strategy and asks the operations manager to vary the total output rate from one quarter to the next. When necessary to do so, the following options and priorities should be used in developing the required output each period.

Finally, the personnel manager reports that because of end-of-year retirements, only 36 (not 44) full-time employees will be on the payroll as of January 2.

a. Develop a chase plan that varies the number of full-time workers per quarter to meet demand without using overtime, subcontracting, or part-time employees.

b. Develop a chase plan following the priority guidelines noted above.

c. What hiring/layoff actions will the personnel department need to take each quarter in parts a and

b, above?

Transcribed Image Text:

Priority 123+ 4 Option Limit (maximum) Full-time employees (FTE) 500 units/quarter/worker Up to 200 units/worker Overtime (FTE) Subcontract Part-time employees Up to 5,000 units/quarter Up to 25 workers/quarter