Question

oogle Chrome ent/1/OPME%20Study%20Guide%20SP5%20-%202019.pdf 2. Case Study A company has the following demand forecast next year, expressed in six bimonthly(2-month) periods. Period قم قم | Forecast Demand (Standard Units of Work) 400 380 470 530 610 500 alo The following costing data have been obtained: • Each employee works 160 regular working hours per month Each unit requires 20 standard hours to produce The labour costs are 56 per normal hour and $9 per overtime hour It costs $3 per month to hold an item in inventory • • Notes: Use the following rules in rounding off the number of employees If the decimal is 0.5 or more, round up. e.g. round 32.6 to 33 the decimal is less than 0.5, round down if the number of employees is decreasing. Le lower than the previous period. If the decimal is less than 0.5, round up if the number of employees is increasing, le higher than the previous period Dr Mouset Amer School of Engineering Page 131 of 139

How many employees will be needed during demand of 610 units in period 5 if no overtime production is to be scheduled

Answer 1

Standard Hours required to produce one unit = 20 hours

No. of units to be produced in period -5 (i.e. Demand of Period-5) = 610 units

Total Hours required to produce 610 units in period-5 = No. of units to be produced in period -5 * Standard Hours required to produce one unit

= 610*20

= 12,200 hours.

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.

No of hours worked by each employee per month = 160 regular working hours.

Therefore, No of hours worked by each employee in each bimonth period = 160*2 = 320 hours

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.

No. of employees needed during demand of 610 units in period 5 if no overtime production is to be scheduled = Total Hours required to produce 610 units in period-5/ No of hours worked by each employee in each bimonth period

= 12,200/320

= 38.125

= 39 (Rounded up as per rule -3 – since in period-5 no, of employees is increasing as demand increases in period-5 as compared to period-4)