Tax Prep Advisers, Inc., has forecasted the following staffing requirements for tax preparation associates over the next 12 months. Management would like three alternative staffing plans to be developed. The company currently has 10 associates. No more than 10 new hires can be accommodated in any month because of limited training facilities. No backorders are allowed, and overtime cannot exceed 25 percent of regular time capacity on any month. There is no cost for unused overtime capacity. Regular-time wages are $1,500 per month, and overtime wages are 150 percent of regular time wages. Undertime is paid at the same rate as regular time. The hiring cost is $2,500 per person, and the layoff cost is $2.000 per person. a. Prepare a staffing plan utilizing a level workforce strategy, minimizing undertime. The plan may call for a one-time adjustment of the workforce before month 1. b. Using a chase strategy, prepare a plan that is consistent with the constraint on hiring and minimizes use of overtime. c. Prepare a mixed strategy in which the workforce level is slowly increased by two employees per month through month 5 and is then decreased by two employees per month starting in month 6 and continuing through month 12. Does this plan violate the hiring or overtime constraints set the company? d. Contrast these three plans on the basis of annualcosts.
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