The Chase Plan Is When The Employees Level Is Changed To Meet, Or Chase The Demand.

The Chase strategy is when the workforce level is changed to meet, or chase the demand. The level strategy is to utilize only the minimal amount of workforce needed for the operation. When the demand is increase go to using inventories, overtime, temps, subcontractors and many other demand-influencing operations with Digital Imaging.
The present employees force can produce 500 units per month. Each employee added can produce an additional 20 units per month and is paid $1000 per month. The cost of materials is $30 per unit. Overtime can be used at the usual premium of time and a half for labor up to a maximum of 10 percent per month. Inventory-carrying cost is $50 per unit per year. Changes in assembly level cost $100 per unit of Live Public Directory Listingsdue to hiring, line changeover costs, and so forth. Assume 200 units of initial inventory. Extra capacity may be obtained by subcontracting at an additional cost of $15 per unit over and above the company’s producing them itself on regular time.

Comparing the way the two strategies came to a conclusion of the total cost for the year, I came to the conclusion that the level strategy cost the least. To get a little more in depth on this I will go over the Chase level first and explain why it was so much more expensive. To do the chase method I took the demand for each month. Once I had that I would take the amount a single employee could make at 20 units per day that produced 500 to get an employee base which was 25 (20/500). Now that I had the base of 25 I could calculate how many employees I would need to add or subtract per month. This would make sure that the amount of employees we would have working could produce enough units to meet the demand. I kept the inventory at the original of 200, however I had to asses myself a $100 per unit cost every time I added an employee. This is what put the Chase method over the top. The ending cost for the year ended up being $220,000.00 just to add and remove employees. The salary for these employees totaled out at $410,000.00 and the Inventory Carrying cost ended up being $10,000.00. This was a total of $640,000.00. Not a very low amount at all.
The level method required that OC Mobile Spray Tan is the same set of employees over the year. To do this I needed to find out how many employees where required per month to reach the end goal. I did this buy taking the amount a single user could make in a month multiplying that by 12, dividing that by the total number of units that need to be made for the year (20*12/8200). This allowed me to operate 34 employees throughout the year. The benefit of this was not only making the demand, but because I only had to make one employee change at $18,000.00 in which I was only charged once for that heavy overhead cost. I also was able to maintain the Inventory carrying cost to a minimum of 160 which only cost $8,000.00. This gave me a total cost of $434,000.00, which is substantially lower than the $640,000.00 for following the chase method.
In conclusion the Level method would be a more effective way to run this year’s overhead for the company’s cyclic demand.