Lighting Post is a manufacturing company that makes two kinds of lights; simple wall lights and floresent commerical lights. The purpose of this case is to determine a production schedule for the workers of the Lighting Post that will enable them to meet the orders for their products. This schedule has to be based on the demand for the lights over the next year which is shown here in the following table:
Month Wall Floresent
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January 1100 350
February 900 250
March 900 80
April 900 70
May 600 80
June 400 70
July 300 300
August 300 300
September 500 450
October 500 450
November 1000 700
December 1000 800
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There are two types of workers; skilled and unskilled lighting technicians.
The wall lamps are simple to manufacturer and can be produced by
either type of technician, but the floresent lamps require a skilled technician. Unskilled
technicians can produce a wall lamp every 60 minutes. Skilled
technicians can produce wall lamps in 45 minutes and a floresent lamp
in 120 minutes.
The hourly rate for an unskilled technician is $8.00/hr for regular hours and $12.00/hr for overtime hours. The hourly rate for skilled technician is $14.00/hr for regular hours and $21.00/hr for overtime hours. There are 40 hours in a normal work week with an upper limited of 8 hours in overtime per day. For planning purposes you can expect 4 work weeks per month, except for July, which is closed for summer vacation.
The cost of hiring an unskilled technician is $800, but the cost of firing him is $320. The cost of hiring an skilled technician is $1600, but the cost of firing him is $2400. It will cost about $2 to store wall lights in inventory between months, but $4 to store floresent commercial lights in inventory between months.
Currently there are 4 unskilled technicians and 3 skilled technicians working for Lighting Post.
1. Create a production schedule for all periods with an inventory at the end of each period, number of workers in each period, and cost for salaries, hiring, firing and inventory.
2. How does the production schedule change if the productivity for unskilled technician would be the same as the skilled technician.
3. How would the production schedule change if the unskilled technicians could produce the floresent lights but at 75% at the rate of skilled labors.
Submitted by Prof. Ingjaldur Hannibalsson, School of Business, University of Iceland