Group 35 1

Workforce Scheduling
Davis Instruments has two manufacturing plants located in Atlanta, Georgia. Product demand varies considerably
from month to month, causing Davis extreme difficulty in workforce scheduling. Recently Davis started hiring
temporary workers supplied by WorkForce Unlimited, a company that specializes in providing temporary
employees for firms in the greater Atlanta area. WorkForce Unlimited offered to provide temporary employees
under three contract options that differ in terms of the length of employment and the cost. The three options are
summarized:
Option Length of Employment Cost
1 One Month $2000
2 Two Month $4800
3 Three Month $7500

Over the next six months, Davis projects the following needs for additional employees:
Month Jan Feb Mar Apr May June
Employees 10 23 19 26 20 14
Needed

Managerial Report
Costs: Contract cost plus training cost
Option Contract Cost Training Cost Total Cost
1 $2000 $875 $2875
2 $4800 $875 $5675
3 $7500 $875 $8375
1. A schedule that shows the number of temporary employees that Davis should hire each month for each
contract option.

The decision variables used in this case problem:

(o)= Options # 1, 2, 3
(m)= Months- Jan (1), Feb (2), Mar (3), April (4), May (5), June (6)
(E)= # of employees hired
(Eom)= # of temporary employees hired under option o (o = 1, 2, 3) in month m (m = 1 for
January, m = 2 for February and so on)
S.J:
m= Jan(1) Feb(2) Mar(3) Apr(4) May(5) June(6)
Option (o) 1 E1 E2 E3 E4 E5 E6
Option (o) 2 E11 E12 E13 E14 E15 X
Option (o) 3 E21 E22 E23 E24 X X
Objective Function:
Minimize: (Option 1 Cost x All Possible Option 1)
+ (Option 2 Cost x All Possible Option 2)
+ (Option 3 Cost x All Possible Option 3)

Minimize: 2875(E1 + E2 + E3 + E4 + E5 + E6)

+ 5675(E11 + E12 + E13 + E14 + E15)
+ 8375(E21 + E22 + E23 + E24)

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 Group 35 2

One constraint is required for each of the six months.

Constraint 1: Need 10 additional employees in January

E1= number of temporary employees hired under Option 1 (one-month contract) in January
E11= number of temporary employees hired under Option 2 (two-month contract) in January
E21= number of temporary employees hired under Option 3 (three-month contract) in January
Jan. Feb. Mar. Apr. May June
Option 1 E1 X X X X X
Option 2 E11 X X X X X
Option 3 E21 X X X X X
E1 + E11 + E21= 10
Constraint 2: Need 23 additional employees in February
E2, E11 and E21 are the number of temporary employees hired under Options 1, 2 and 3 in February.
However, temporary employees hired under Option 2 or Option 3 in January will also be available for
February needs.
Jan. Feb. Mar. Apr. May June
Option 1 X E2 X X X X
Option 2 E11 E12 X X X X
Option 3 E21 E22 X X X X
E11 + E21 + E2 + E12 + E22 = 23
Constraint 3: Need 19 additional employees in March
Jan. Feb. Mar. Apr. May June
Option 1 X X E13 X X X
Option 2 X E12 E13 X X X
Option 3 E21 E22 E23 X X X
E21 + E12 + E22 + E3 + E13 + E23 = 19
Constraint 4: Need 26 additional employees in April
Jan. Feb. Mar. Apr. May June
Option 1 X X X E4 X X
Option 2 X X E13 E14 X X
Option 3 X E22 E23 E24 X X
E22 + E13 + E23 + E4 + E14 + E24 = 26
Constraint 5: Need 20 additional employees in May
Jan. Feb. Mar. Apr. May June
Option 1 X X X X E5 X
Option 2 X X X E14 E15 X
Option 3 X X E23 E24 X X
E23 + E14 + E24 + E5 +E15 = 20
Constraint 6: Need 14 additional employees in June.
Jan. Feb. Mar. Apr. May June
Option 1 X X X X X E6
Option 2 X X X X E15 X
Option 3 X X X E24 X X
E24 + E15 + E6 = 14

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 Group 35 3

Optimal Solution (See Excel Solver Attachment):

Number of Temp. Employees to Hire Each Month
m= Jan. (1) Feb. (2) Mar. (3) Apr. (4) May (5) June (6)
(o)ption 1 0 7 0 0 0 0
(o)ption 2 3 0 0 0 0 X
(o)ption 3 7 6 6 14 X X
Minimum Total Cost: ($2875 x 7) + ($5674 x 6) + ($8375 x [7 + 6 + 6 + 14])
Total Cost: $313,525

2. A summary table that shows the number of temporary employees that Davis should hire under each contract
option, the associated contract cost for each option, and the associated training cost for each option. Provide
summary totals showing the total number of temporary employees hired, total contract costs, and total
training costs
Option Number Hired Contract Cost Training Cost Total Cost
1 7 $14,000 $6,125 $20,125
2 3 $14,400 $2,625 $17,025
3 33 $247,500 $28,875 $276,375
Total: $275,900 $37,625 $313,525

3. An explanation of how reducing the cost to train each temporary employee to $700 per month affects the
hiring plan. Discuss the implications that this effect on the hiring plan has for identifying methods for reducing
training costs. How much of a reduction in training costs would be required to change the hiring plan based
on a training cost of $875 per temporary employee? (See Excel Solver Attachment)

Option Contract Cost Training Cost Total Cost

Number of1 Temp. Employees
$2000 to Hire Each
$700Month ($700 Training)
$2700
m= 2 Jan. (1) $4800
Feb. (2) Mar.$700
(3) Apr. (4) $5500
May (5) June (6)
(o)ption 1 3 10 $750023 $700
19 26 $820020 14
Minimize: 2700
(o)ption 2 0 0 0 0 0 X
(E 1 + E2 + E3 + E4 + E5 +
E6 (o)ption 3 0 0 0 0 X X )
Min Total Cost: $ 2700(10 + 23 + 19 + 26 + 20 +14) ) + $5500(0) + $8200(0) +
Total Cost: $302,400 5500 (E11 + E12 + E13
+ E14 + E15)
+ 8200 (E21 + E22 + E23 + E24)
Davis Instruments changing their temporary employee training cost from $875 per month to $700 per month. The
optimal solution results in a different decision when hiring a temporary employee, which means choosing a
temporary option. A training cost of $700 per temporary employee would recommend Davis Instruments to choose
option 1 for only 1 month contracts. The total cost of this strategy is $302,400 and if the training cost kept getting
lower, option 1 would still be the vital option to choose.

4. A recommendation regarding the decision to hire additional full-time employees if Davis can hire 10 full-time
employees at the beginning of January in order to satisfy part of the labor requirements over the next six
months. Assume that Davis can hire full-time employees at $16.50 per hour, including fringe benefits, and
that full-time and temporary employees both work approximately 160 hours per month. What effect would
does the hiring of additional full-time employees have on total labor and training costs over the six-month
period as compared to hiring only temporary employees?

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 Group 35 4

If Davis Instruments is hiring 10 full-time employees at the beginning of January, it will reduce the number of
temporary employees needed each month by 10.
Month Ja Fe Ma Ap Ma Jun
n b r r y e
Employees 0 13 9 16 10 4
Needed

Optimal Solution (See Excel Solver Attachment)

Min: 2000 (E1 + E2 + E3 + E4 + E5 + E6) + 4800(E11 + E12 + E13 + E14 + E15) + 7500(E21 + E22 + E23 + E24)
Min Total Cost: $2000(7) + $4800(3) + $7500(6 + 3 + 4)
Minimum Total Cost= $146,025

Temporary Cost Per Total Cost Training Total Total Cost

Employees Contract Contract Cost Per Contract Training Cost
Hired
Option 1 7 $2,000 $14,000 $875 $6,125 $20,125
Option 2 3 $4,800 $14,400 $875 $2,625 $17,025
Option 3 13 $7,500 $97,500 $875 $11,375 $108,875
Totals 23 $14,300 $125,900 $2,625 $20,125 $146,025

Hiring 10 Full-Time Employee Cost:

After solving the total cost of hiring temporary employees, Davis Instruments now need to solve the cost of
having 10 full-time employees. Davis Instruments must take into account the hourly rate of $16.50 for 160
hours a month and $875 cost of training.
Total Salary of Full-time (10 full-time employees) x (6
Employees months) x (160 hours) x ($16.50) =$158,400
Training Cost for Full-Time (10 Full-time Employees) x ($875
Employees: training cost) = $8,750
Total Cost of Hiring 10 Full-Time
Employees $158,400 + $8,750 = $167,150
Total Cost of Hiring Full-Time and
Temporary Employees $158,400 + $8,750 + $146,042 = $313,192

Conclusion:
Davis Instruments should not continue to contract with WorkForce for temporary employees and instead hire
10 full-time employees. Hiring 10 full-time employees ($313,192) compare to hiring temporary employees
($313,525) results in $313,192 - $313,525= -$333 cheaper. Davis Instruments will save more money by hiring
10 full-time employees by $333.00 and will only have to pay for a one time training cost per employee after
hiring.

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