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Class Example

Problem 1: The original problem


Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker hour
hours per day
days per season

Temporary workers may be hired in the beginning of summer


Overtime is available during winter or spring if necessary to prevent stockout
Overtime is not available during fall

Fall
Winter
Spring
Summer

Forecast Beginning Production Production Production


Inventory Required
Hours
Hours
Required
Available
10000
500
9500
19000
14400
8000
-2300
10300
20600
14400
7000
0
7000
14000
14400
12000
200
11800
23600
14400

Fall
Winter
Spring
Summer

Workers
Hired
0
0
0
20

Workers
Actual
Fired Production
0
7200
0
10300
0
7200
20
11800

Bakorder Overtime
Cost
Cost
Fall
Winter
Spring
Summer

23000
0
0
0

Total cost

413600

0
49600
0
0

Overtime
Hours
0
6200
0
0

Ending
Inventory
-2300
0
200
0

Hiring
Cost

Firing
Cost

0
0
0
2000

0
0
0
4000

Inventory Straighttime
Holding
Cost
Cost
0
72000
0
72000
1000
72000
0
118000

Class Example
Problem 2: Chase, no overtime, work hours not flexible
Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker-hour
hours per day
days per season

Forecast Beginning
Inventory
Fall
Winter
Spring
Summer

Fall
Winter
Spring
Summer
Total

Net Production Workers Workers


Production
Hours Required
Hired
Requirement Required
9500
19000
40
10
7900
15800
33
0
6980
13960
30
0
11780
23560
50
20

10000
8000
7000
12000

500
100
20
220

Actual
Production

Ending
Inventory

Hiring
Cost

Firing
Cost

9600
7920
7200
12000

100
20
220
220

1000
0
0
2000

0
1400
600
0

Straight Inventory
time Holding
Cost
Cost
96000
500
79200
100
72000
1100
120000
1100

Note:
Production requirement is obtained by considering nonzero ending inventories.

Workers
Fired
0
7
3
0
Total
Cost
97500
80700
73700
123100
375000

Class Example
Problem 3: Chase, no overtime, flexible hours
Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

Fall
Winter
Spring
Summer

Fall
Winter
Spring
Summer
Total

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker-hour
hours per day
days per season

Net Production
Production
Hours
Requirement Required
9500
19000
8000
16000
7000
14000
12000
24000
Hiring
Cost

Firing
Cost

1000
0
0
2100

0
1200
800
0

Note:
Working hour is assumed to be flexible.

Workers
Required

Workers
Hired

Workers
Fired

40
34
30
51

10
0
0
21

0
6
4
0

Straight
time
Cost
95000
80000
70000
120000

Total
Cost
96000
81200
70800
122100
370100

Class Example
Problem 4: Constant workforce, no overtime, no shortages
Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker hour
hours per day
days per season

Computation of the workforce required for avoiding shortages

Fall
Winter
Spring
Summer

Forecast Beginning Production


Cumulative Cumulative Workers
Inventory Requirement Production
units
Required
Requirement produced
per worker
10000
500
9500
9500
240
40
8000
8000
17500
480
37
7000
7000
24500
720
35
12000
12000
36500
960
39

If shortages are not allowed, we must choose 40 workers throughout.


Workers hired
Workers fired
Total workers

10
0
40

Initial hiring cost


Initial firing cost
Initial recruitment cost
Straighttime cost

Forecast Beginning
Inventory
Fall
Winter
Spring
Summer

10000
8000
7000
12000

Total cost

425000

500
100
1700
4300

1000
0
1000
384000

Actual
Production

Ending
Inventory

9600
9600
9600
9600

100
1700
4300
1900

Inventory Backorder
Holding
Cost
Cost
500
0
8500
0
21500
0
9500
0

Class Example
Problem 5: Constant workforce with 6 new workers, no overtime, shortages allowed
Number of Work

30

Recruitment costs
Hiring cost
Firing cost
Wages
Straight time co
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

Workers hired
Workers fired
Total workers

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker hour
hours per day
days per season

6
0
36

Initial hiring cost


Initial firing cost
Initial recruitment cost
Straighttime cost

Forecast Beginning
Inventory
Fall
Winter
Spring
Summer

Fall
Winter
Spring
Summer

10000
8000
7000
12000

Actual Ending
Production Inventory

500
-860
-220
1420

8640
8640
8640
8640

Inventory Backorder
Holding
Cost
Cost
0
8600
0
2200
7100
0
0
19400
Total

Total
Cost
8600
2200
7100
19400
383500

-860
-220
1420
-1940

600
0
600
345600

Class Example
Problem 6: Constant workforce with 7 new workers, overtime is used to prevent shortages
Number o

30

Recruitment costs
Hiring co
100
Firing co
200
Wages
Straight
5
Overtime
8
Inventory costs
Holding
5
Backorde
10
Productiv
0.5
Working
8
60
Workers h
Workers fi
Total work

for each temporary worker


for each worker laid off
per hour
per hour
per unit-quarter
per unit
units per worker hour
hours per day
days per season

7
0
37

Initial hiring cost


Initial firing cost
Initial recruitment cost
Straighttime cost

Forecast Beginning
Regular
Inventory Production
Fall
Winter
Spring
Summer

Fall
Winter
Spring
Summer

Units
Units
Available Overtime
Before OT
-620
620
880
0
2760
0
-360
360

10000
8000
7000
12000

500
0
880
2760

8880
8880
8880
8880

Ending
Inventory

Inventory
Holding
Cost
0
4400
13800
0

Overtime
Cost

Total
Cost

9920
0
0
5760

9920
4400
13800
5760
389780

0
880
2760
0

Total

700
0
700
355200

Class Example
Problem 7: Linear optimization
Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60
Forecast

Fall
Winter
Spring
Summer

Fall
Winter
Spring
Summer

10000
8000
7000
12000

Total cost

Beginning
Inventory

0
0
0
50000
368041.67

Workers
Hired

Workers
Fired

Total Overtime
Workers
Hours

500 9.58333333
0 39.583333
0
0
6.25 33.333333
0
0 4.166667 29.166667
0
0
0 29.166667

Regular
Actual
Production Production
Hours
Units
19000
9500
16000
8000
14000
7000
14000
7000
Bakorder
Cost

Fall
Winter
Spring
Summer

per unit-quarter
per unit
units per worker hour
hours per day
days per season

Overtime
Cost

0
0
0
0

Ending
Positive Backorder Ending
Inventory Inventory
Inventory
Computed
Chosen
0
0
0
0
0
0
0
0
0
0
0
0
-5000
0
5000
-5000
Hiring
Cost

Firing
Cost

0 958.333333
0
0
0
1250
0
0 833.3333
0
0
0

Inventory StraightHolding
time
Cost
Cost
0
95000
0
80000
0
70000
0
70000

Class Example
Problem 8: Linear optimization, rounding off
Number of Workers
Recruitment costs
Hiring cost
Firing cost
Wages
Straight time cost
Overtime cost
Inventory costs
Holding cost
Backorder cost
Productivity
Working hours

Fall
Winter
Spring
Summer

30

100 for each temporary worker


200 for each worker laid off
5 per hour
8 per hour
5
10
0.5
8
60

per unit-quarter
per unit
units per worker hour
hours per day
days per season

Forecast

Beginning
Inventory

Workers
Hired

Workers
Fired

10000
8000
7000
12000

500
0
0
0

9
0
0
0

0
6
4
0

Total Overtime
Workers
Hours
39
33
29
29

280
160
80
0
.

Fall
Winter
Spring
Summer

Regular
Actual
Production Production
Hours
Units
18720
9500
15840
8000
13920
7000
13920
6960

Ending
Positive Backorder Ending
Inventory Inventory
Inventory
Computed
Chosen
0
0
0
0
0
0
0
0
0
0
0
0
-5040
0
5040
-5040

Bakorder
Cost

Overtime
Cost

Hiring
Cost

Firing
Cost

Fall
Winter
Spring
Summer

0
0
0
50400

2240
1280
640
0

900
0
0
0

0
1200
800
0

Total cost

369460

Inventory StraightHolding
time
Cost
Cost
0
93600
0
79200
0
69600
0
69600