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To process income tax forms, the Internal Revenue Service (IRS) first sends each
form through the data preparation (DP) department, where information is coded
for computer entry. Then the form is sent to data entry (DE), where it is entered
into the computer. During the next 3 weeks, the following numbers of forms will
arrive: week 1, 40,000; week 2, 30,000; week 3, 60,000. All employees work 40
hours per week and are paid $500 per week. Data preparation of a form requires
15 minutes, and data entry of a form requires 10 minutes. Each week an
employee is assigned to either data entry or data preparation. The IRS must
complete processing all forms by the end of week 5 and wants to minimize the
cost of accomplishing this goal. Assume all employees are capable of performing
data preparation or data entry, but must be assigned to one task for an entire
week at a time.
Determine how many workers should be working and how the workers should
allocate their hours during the next 5 weeks.
1
Based on 4-83 (p. 202) in Practical Management Science (4th ed., Winston and Albright, 2012
Duxbury Press). Based on Lanzenauer et al. (1987). Solution by David Juran.
Mathematical Formulation
Decision Variables
Define Xij = Number of workers on task i during week j.
Define Pij = Production (forms processed on task i during week j).
i = tasks 1-2, j = weeks 1-5
Objective
2 5
Minimize Z = X
i 1 j 1
ij Ci
Where Ci is the cost of hiring a worker for task i for one week.
C1 = C2 = $500
Constraints
A new kind of constraint: Balance Equations for each task in each week.
Define Iij = Inventory (work ready to be processed on task i at the end of week j).
Ending “inventory” = beginning inventory + new forms arriving – current
period processing
I ij I i , j 1 Pi 1 , j 1 Pij
Note that
P0 , 0 40 ,000
P0 , 1 30 ,000
P0 , 2 60 ,000
2
Spreadsheet Model
A B C D E F G H
1 Inputs Minutes
2 Data prep form time 15
3 Data entry form time 10
4 Hours per worker per week 40
5 Pay/week per worker $500
6
7 Week1 Week2 Week3 Week4 Week5
8 Number of forms arriving 40000 30000 60000 0 0
9
10 Decisions
11 Workers on data prep 1 1 1 1 1
12 Workers on data entry 1 1 1 1 1
13
14 Number of DP forms completed during week 1 1 1 1 1
15 Number of DE forms completed during week 1 1 1 1 1
16
17 Constraints on labor (need sufficient workers to complete forms) =F14*$B$2/60
18 Hours for DP needed 0.25 0.25 0.25 0.25 0.25
19 <= <= <= <= <= =F11*$B$4
20 Hours for DP available 40 40 40 40 40
21
22 Hours for DE needed 0.166667 0.166667 0.166667 0.166667 0.166667
=F15*$B$3/60
23 <= <= <= <= <=
24 Hours for DE available =B8
40 40 40 40 40
=F12*$B$4
25 =B27-B29+C8
26 Constraints on forms (can't process more than are available for processing)
27 DP forms available for processing =B14 40000 69999 129998 129997 129996
28 >= >= >= >= >=
29 DP forms processed =B14 1 1 1 1 1
30 =B31-B33+C29
Note that the balance equations are not constraints in the usual sense (i.e.
specified in Solver). We build them into the model, linking the tasks and weeks
together.
3
A B C D E F
1 Inputs Minutes
2 Data prep form time 15
3 Data entry form time 10
4 Hours per worker per week 40
5 Pay/week per worker $500
6
7 Week1 Week2 Week3 Week4 Week5
8 Number of forms arriving 40000 30000 60000 0 0
9
10 Decisions
11 Workers on data prep 250 187.5 375 0 0
12 Workers on data entry 0 0 0 0 541.6667
13
14 Number of DP forms completed during week 40000 30000 60000 0 0
15 Number of DE forms completed during week 0 0 0 0 130000
16
17 Constraints on labor (need sufficient workers to complete forms)
18 Hours for DP needed 10000 7500 15000 0 0
19 <= <= <= <= <=
20 Hours for DP available 10000 7500 15000 0 0
21
22 Hours for DE needed 0 0 0 0 21666.67
23 <= <= <= <= <=
24 Hours for DE available 0 0 0 0 21667
25
26 Constraints on forms (can't process more than are available for processing)
27 DP forms available for processing 40000 30000 60000 0 0
28 >= >= >= >= >=
29 DP forms processed 40000 30000 60000 0 0
30
31 DE forms available for processing 40000 70000 130000 130000 130000
32 >= >= >= >= >=
33 DE forms processed 0 0 0 0 130000
34
35 Constraints on finishing all forms by the end of week 5
36 DP at end 0 = 0
37 DE at ent 0 = 0
38
39 Total cost $677,083
4
Conclusions
Minimum total cost is $677,073.
All work could be done in four weeks.