Monongahela Mittens Manufacturing

Monongahela Mittens Manufacturing (MMM) is a medium-sized manufacturing facility

that produces high quality gloves and mittens. Its product line consists of three basic
models : a driving glove (Model 101), a dress glove (Model 102), and a ski mitten
(Model 103). There is a strong seasonal demand for this ski product; 70 percent of all
sales occur in the four-month period from November through February. The marketing
and manufacturing departments have arrived at the following production schedule
(Table 1) for the next fiscal year and have asked for your comments. This schedule
minimizes inventory costs, a major consideration of the firm.

As a human resources manager, one of your tasks is manpower planning. This involves
calculating how many people will be necessary for the firm to meet its production plans,
and instituting plans and programs to insure that they will be available. There are certain
assumptions you must make, based on information gathered from the industrial
engineering department and your own department’s records. The following pieces of
information concern things that cannot be changed in the short run.

1. Standard Labor Hours: The total standard labor hours needed to produce each
unit (pair) are:

________________________
Model Hours
________________________
101 0.33
102 0.33
103 0.40
________________________

2. Standard workday: The union contract defines a standard workday as eight

hours. Any overtime is paid at 150 percent of standard wages.

3. Time loss: Absenteeism varies by quarter.

_____________________________
Quarter Percent of
Actual Hours Lost
_____________________________
1 2.5%
2 1.0
3 1.5
4 2.0
_____________________________

4. Wage Rate: The current average wage rate is $6.50/hour. Fringe benefits costs
equal 15 percent of salary costs. All employees receive fringe benefits.

1
 5. Production Schedule: The total annual demand for products is:

Table Production schedule for

Model Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total

(July - Sept.) (Oct. – Dec.) (Jan. – Mar.) (April – June)
101 5,551 3,629 4,296 9,180 22,656
102 5,551 3,629 4,296 9,180 22,656
103 16,653 13,131 8,400 29,784 67,968
Total 27,755 20,389 16,992 48,144 113,280

Model Number of Units

101 22,656
102 22,656
103 67,968

The maximum number of units that can be produced in any one quarter is:

Model Number of Units

101 9,200
102 9,200
103 30,000

The following pieces of information concern things that can be changed in the short run.
You can manipulate these items, but consider the costs as well as the benefits of doing so.

1. Productivity: People do not or cannot produce at 100 percent efficiency. The

standard hour figures given for production assume that a person is working
continually and, therefore, do not reflect what is really going on. At this point, your
department has measured productivity at 82 percent. Without the introduction of new
technology or machinery, it is your best guess that productivity could be improved a
maximum of 4 percent.

2. Staffing levels: Currently 21 people are engaged in the production process. The
skills and abilities of all labor are interchangeable. Additional persons are not
difficult to obtain, but hiring, training and layoff costs do exist.

2
Discussion Questions

1. If current staffing levels are maintained, are there enough employees available to
allow MMM to achieve its production schedule? No If not, how many additional
personnel are required? Atleast 2 What alternatives does MMM have to secure
these personnel?

2. If there are too many persons during anyone production quarter, what alternatives
does MMM have to deal with the surplus? Make them work and stock inventory
Be sure to consider both the costs and benefits associated with each of these
alternatives.

3. What effect will improving productivity have on staffing levels? Less OT at 23

employees, no OT for 24 employees

4. Can you suggest any shifts in production from one quarter to another that would
help smooth out staffing requirements? Stock inventory in Q3 for Q4