ISQA 459 /559DR. MELLIE PULLMAN

FoldRite Furniture Approaches

Planning Steps

Calculate the existing available skilled and unskilled workers Case states that company has sufficient workers to make the

annual forecast over 200 production days (2010)-level So calculate average need for each product at each skill level

Determine the Labor actually needed to fill demand (March-August)

Determine the total cost of fulfilling demand for each option by figuring cost of: Overtime Use of subcontractors Hiring and Training workers Cost of Design Change Cost of Carrying Inventory

Based on Forecast 2010 data

Data From Template Sufficient Capacity to produce

Annual Forecast with 200 production days in 2010

Workers work 10 hour days Capacity to produce:

524,280 Cloudchairs 306,916 AlStrong 253,570 Green Comfort

Staffing = labor time * Daily Capacity/

(daily hours/worker *yield)Example: Cloud Chair w/ Skilled(2 min/item)(hr/60min)*(2621.4 ch/day)/

(10 hours/day/worker)*.95= 9.2 workers

Required Labor

Daily CurrentCapacit

y

Current Staffing Level

Mins/item

=yearly/200 days

Skilled

Unskilled Skilled Unskilled

CloudChair 2 9 2,621.4 9.2 ?

AlStrong 12.8 28 1,534.6 34.5 ?

GreenComfort 13 31 1,267.9 28.9 ?

Calculate Available Workers

Total Skilled Workers = 73Total Unskilled Workers=?

Calculate hours for eachCategory

Data From Template

Staffing = labor time * Daily Demand/

(yield)Example: Cloud Chair w/

Skilled(2min/item)(hr/60min)*(2500

ch/day)/.95= 87.72 worker hours/dayOr (per month @ 18 days)= 87.72 worker hours/day

*18=1578.9 hours

Required Labor per product

March Forecas

t

Labor hours needed

Mins/item

Daily(18

days)

Monthly

SkilledUn

skilled Skilled Unskilled

CloudChair 2 9 2500 1578.9 ?

AlStrong 12.8 28 1500 6063.2 ?

GreenComfort 13 31 1260 5172.6 ?

Determine Labor Hours Needed (March)

Determine Labor Hours Needed (March-August)

  March April May June July August

CloudChair 45,000 73,800 65,250 79,200 86,400 67,150

AlStrong 27,000 29,700 28,500 36,000 32,400 29,750

GreenComfort 22,680 25,200 22,500 27,900 25,200 21,250

Production days 18 18 15 18 18 17 Required skilled hours 12,815 15,006 13,821 Available skilled hours 13,140 13,140 10,950 Excess (shortfall) 325 (1,866) (2,871)Needed Skilled workers (2) 10 19 Required unskilled hours 32,703 39,947 36,539 Available unskilled hours 33,480 33,480 27,900 Excess (shortfall) 777 (6,467) (8,639)Needed unskilled workers (4) 36 58

Tackling the shortages & surpluses

Average all the required people per month for 6 months gives:

13 additional skilled & 40 unskilled Or don’t hire until April and Use excess

worker capacity to build inventory in March then average the remaining demand over 5 months.

Consider other options (at least 2)

Overtime. What is the additional labor cost?Subcontract. Frees up skilled labor hours and

some unskilled hours, still need to hire some. Hiring

Early hiring in March with carrying extra inventory Hiring in April with carrying extra inventory Hiring and Training in March

Change in Design Hire all workers March 1 and use overtime for some Hire all needed workers in April Hire unskilled workers to train in March and start extra

production in April