A company has the following demand forecast for the next year, expressed in six bimonthly (2-month) periods:
Period Forecast Demand (Standard Units of Work)
a) Assume that an employee contributes 176 regular working hours each month and that each unit requires 20 standard hours to produce. How many employees will be needed during the period the peak demand of 610 units in period 5 if no overtime production id to be scheduled?
b) What will be the average labor cost for each unit if the company pays employees $6 per hour and maintains for the entire year a sufficient staff to meet the peak demand without overtime?
c) What percentage above the standard-hour cost is the company’s average labor cost per unit in this year due to the company’s decision to maintain stable employment sufficient to serve the peak demand period without overtime?