Lecture 5

Public administration
Calculating the human resources needs:
Problem (1):
You are given the following information about the expected demand on a
product generated by a public organization

Period in years Forecasted demand in units

1 260,000
2 240,000
3 220,000
4 250,000
5 240,000
6 300,000
Beginning period inventory =60,000 units
The time required to produce 1 unit =10 hours
The cost associated with hiring 1 worker= $2000
The cost associated with laying off 1 worker=$4000
Each worker can work 1000 hours per period
The current number of workers = 2000
If you know that:
1. The public organization produces based on forecasted demand
2. Workers are employed on contractual bases
Required:
Forecast the future needs of the public organization of workers for the
six periods.

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Solution:
period Forecasted Forecasted Production Required hiring Laying
demand production time in workers off
volume hours
1 260,000 200,000 2,000,000 2,000 0 0
2 240,000 240,000 2,400,000 2,400 400 ---
3 220,000 220,000 2,200,000 2,200 --- 200
4 250,000 250,000 2,500,000 2,500 300 ---
5 240,000 240,000 2,400,000 2,400 --- 100
6 300,000 300,000 3,000,000 3,000 600
1,300 300

 The forecasted production volume for period (1):

= forecasted demand (-) beginning inventory balance
= 260,000- 60,000= 200,000 units
 Production time in hours:
= the forecasted production volume * time required to produce 1
unit
 time required to produce 1 unit =10 working hours (given)
 Required workers:
Production time in hours \ the number of working hours carried out
by each worker per period
 the number of working hours carried out by each worker per
period = 1000 hours (given)
 Hiring and laying off is calculated as:
For period (1):
Required workers (-) number of workers currently at work
 Number of workers currently at work = 2,000 workers
(given)
When:
 +ve figure is obtained:
Hiring decision is undertaken
2
  -ve figure is obtained
Lay off decision is undertaken
Total costs associated with hiring and layoff decisions:
Hiring cost + lay off cost
Hiring costs: total number of workers who will get hired * hiring cost
per worker
= 1,300* 2000 =$2,600,000
Lay off costs: total number of workers who will be laid off * lay off cost
per worker
=300 * 4000=$1,200,000
$2,600,000 + $1,200,000= $3,800,000
Problem (2):
The estimated demand on the product offered by a public organization is
shown in the following table:

Period Estimated demand

1 250,000
2 220,000
3 300,000
4 210,000
5 205,000
6 360,000
Beginning inventory balance at the beginning of period 1 =50,000 units
The time required to produce 1 unit = 10 hours
The hiring cost per worker = $3,500
The layoff cost per worker = $ 7,000
If each worker can work 1,000 hours per period

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The current number of workers =2000 workers
If you know that:
1- the public organization produces only based on the forecasted
demand
2- Workers work on contractual bases
Required:
1- Estimating the future organizational needs of workers
2- Estimating the number of workers who will be laid off
3- Estimating the costs associated with hiring and lay off of
workers
Solution:
period Forecasted Forecasted Production Required hiring Laying
demand production time in workers off
volume hours
1 250,000 200,000 2,000,000 2,000 0 0
2 220,000 220,000 2,200,000 2,200 200 ---
3 300,000 300,000 3,000,000 3,000 800 ---
4 210,000 210,000 2,100,000 2,100 --- 900
5 205,000 205,000 2,050,000 2,050 --- 50
6 360,000 360,000 3,600,000 3,600 1,550 ---
2,550 950
1- Total number of employees to be hired = 2,550 workers
2- Total number of workers to be laid off = 950 workers
3- Total cost associated with hiring and laying off workers=
(2,550 *$3,500) + (950* 7,000)
=$15,575,000

Problem 3:
You are given the following information about the future expected
demand for a public good for the next six months in 2023 as shown in
the following table

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 Period Expected demand
January 12,000
February 12,000
March 4,000
April 9,000
May 6,000
June 10,000
Beginning inventory balance = 24,000 units
Total working hours carried out by each worker \month =200 hours
Time required to produce 1 unit = 10 hours
Current number of workers= 30 workers
Hiring cost per worker= $4,000
Laying off cost per worker= $8,000
If you know that:
1- The public organization produce based on forecasted demand
2- Workers are employed on contractual bases
Required:
4- Estimating the future organizational needs of workers
5- Estimating the number of workers who will be laid off
6- Estimating the costs associated with hiring and lay off of
workers
Solution:
period Forecasted Forecasted Total Required hiring Lay
demand production production workers off
time
January 12,000 - - - - 30
February 12,000 - - - - -
march 4,000 4,000 40,000 200 200 -
April 9,000 9,000 90,000 450 250 -
May 6,000 6,000 60,000 300 - 150
June 10,000 10,000 100,000 500 200 -
650 180

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1- Total number of workers to be hired = 650 workers
2- Total number of workers who will be laid off= 180 workers
3- Total cost= (650 *4000) +(8000*180) = $4,040,000