Output Decisions Under a Guaranteed Annual Wage Plan

by Robert Jaedicke



The problem of work scheduling and the control of labor hours occurs at two different levels. First, given a certain output schedule, the company must decide on the proper size of each gang. Second, the gang foremen must make certain that the individuals on the gang are used effectively. The objective of both of these decisions is same: to secure a full and even utilization of the labor force and prevent under and over hours from being paid simultaneously. Both of these problems must he solved within the framework of the over time restrictions and the basic annual guarantee. One of the important problems created by wage plan and the related overtime provisions involves work scheduling to insure the best use of the labor force throughout the year. In conclusion, it appears that contractual arrangements which specify the price and quantity of production factors create a need for opportunity cost information. Assuming that profits are to be maximized the level of output for the coming year would be chosen by equating marginal cost and marginal revenue.

California Management Review

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