Overtime labor cost

Overtime labor cost. As overtime labor cost is 6 per hour (see Table 8-3) and Of represents the number of overtime hours worked in Period t, the overtime cost over the planning horizon is... 

Possible increased overtime, wasted time, and increased labor cost. 

A simple model of this form to illustrate the basic types of issues that crm be modeled is given below. Let the decision variables denote the amount of product i to be produced in period t. We will let I l denote the amount of inventory on hand at the end of period t and S, the amount of backlog at the end of period t. The product j produced in period t is assumed to become available ij periods later, that is, we assume a fixed lead time of Tj for product j. The model will rilso determine the amounts of regular and overtime labor to be used, which will be denoted by LR, and LO, respectively. Costs are also incurred when we increase and decrease our labor force, rmd are proportional to the amount of the increase or decrease. Denoting the amount of labor force increase or decrease in period t by A, and A, respectively, we can then state a basic model as follows. 

When a facility operates smoothly, the cost of maintenance goes down because fewer spare parts will have to be purchased, and labor costs— particularly overtime— will be reduced. 

Labor costs regnlar time ( /honr), and overtime costs ( /hour)... 

As a minimum, your baseline data set should include the labor, overhead, overtime premiums and other payroll costs of the maintenance department. It should also include all maintenance related contract services, excluding janitorial, and the total costs of spare parts inventories. The baseline should also include the percentage of unscheduled maintenance repairs versus scheduled actual repair costs on critical plant equipment and the annual availability of the plant. 

When there is a rapid increase in industrial and private building, construction labor is usually in short supply. Under these conditions companies must often guarantee two hours overtime per day and ten hours of overtime per week in order to get workers. All overtime is at least at the time-and-a-half rate, and usually anything over 50 hours per week is at double the base rate. For electricians, all overtime costs the company twice the usual rate. Under these conditions it was not unusual for a man in the building trades to earn over 500 per working week in 1972. 

Overtime is especially costly because after laboring eight hours a man s efficiency is less. He is naturally tired. Some employers have claimed that when a worker puts in two hours of overtime they get only about one hour of services. This means a company may pay for twelve hours of work at the base pay rate and effectively get only nine hours of work per day. This could increase the cost of construction labor by one-third or the total cost of constructing the plant by over 8%. The average construction costs index by state is given annually in the Plant Sites issue of Chemical Week and by the Federal Department of Labor. 

These generalizations can be applied to any job. There are some activities that cannot be speeded up. Others can be done faster, but in most cases this involves spending more money in obtaining special equipment, hiring more labor, paying overtime, working an extra shift, and so on. For all activities there is some minimum finite performance time. No matter what is done, it cannot be completed any faster. This is called the crush time of the activity, and the cost associated with it is the crush cost. The same is true for projects. The crash cost of a project is the price associated with finishing the project in the crash (minimum) time. 

The plants are assumed to be operating at capacity, making the fullest utilization of capital over a 48 week/year production schedule operating three sh1fts/day and five days/week (annual operating hours 0 5,760). A minimal amount of production overtime to meet demand was assumed 1f this was cost effective versus purchasing additional tooling. Labor was calculated at 20.00/hour over 52 weeks. 

The agent receives the compensation transferred by the principal and incurs a variable production cost at a rate g ii) whenever the production rate is //. The function (/x) is assumed to be increasing and convex with p(0) = 0. This convexity may reflect, for example, an increasing marginal cost of labor associated with overtime or that as the agent shifts production capacity away from his alternative customers, he withdraws capacity from the least lucrative customers first. 

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