Varying the utilization of the workforce: Under this strategy, the firm maintains a stable workforce and varies the utilization of the workforce in accordance with demand or required output. When demand is lean, the workforce is scheduled to produce only the output to meet demand, resulting in idle work hours. On the other hand, if the demand is high, the same workforce works overtime to meet the demand. So, the workforce is overworked when demand is high, and underutilized when demand is less.
Although this strategy avoids the hiring and layoff costs associated with the earlier strategy of varying the workforce size, expensive overtime costs are incurred. The legal and behavioral limits on overtime are some of the other disadvantages. The employees tend to become inefficient and are prone to job-related accidents, if they have to work overtime. On the other hand, too much of idle time results in loss of interest and affects employee morale.
Table : Production Plan with Varying Workforce Level
Month
|
Jun
|
Jul
|
Aug
|
Sep
|
Working days
|
24
|
25
|
23
|
24
|
|
Units per month/workers
|
72
|
75
|
69
|
72
|
|
Workers available
|
40
|
44
|
40
|
42
|
|
Demand
|
3170
|
3000
|
2900
|
2660
|
|
Total output
|
72×40
= 2880
|
75×44
= 3300
|
69×40
= 2760
|
72×42
= 3024
|
|
Deficit
|
290
|
|
140
|
|
|
Surplus
|
0
|
300
|
|
364
|
|
Number of additional workers needed
|
4
|
|
140/69 = 2
|
|
|
Hiring costs
|
12000
|
0
|
6000
|
0
|
|
Number of workers
to be laid off
|
0
|
300/75 = 4
|
0
|
364/72 = 5
|
|
Layoff costs
|
0
|
16000
|
0
|
20000
|
|
Total number of workers
|
44
|
40
|
42
|
37
|
|
Total Costs (hire/layoff)
|
12000
|
16000
|
6000
|
20000
|
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