manpower Planning

https://github.com/swapnilvermani/Optimisation

Problem Description
A company is changing how it runs its business, and therefore its staffing needs are
expected to change.
Through the purchase of new machinery, it is expected that there will be less need
for unskilled labour and more need for skilled and semi-skilled labour. In addition, a
lower sales forecast — driven by an economic slowdown that is predicted to happen
in the next year — is expected to further reduce labour needs across all categories.
The forecast for labour needs over the next three years is as follows:
Unskille
Semi-skilled Skilled
d

Current
2000 1500 1000
Strength

Year 1 1000 1400 1000

Year 2 500 2000 1500

Year 3 0 2500 2000

The company needs to determine the following for each of the next three years:

 Recruitment
 Retraining
 Layoffs (redundancy)
 Part-time vs. full-time employees

It is important to note that labour is subject to a certain level of natural attrition each
year. The rate of attrition is relatively high in the first year after a new employee is
hired and relatively low in subsequent years. The expected attrition rates are as
follows:
Unskilled (%) Semi-skilled (%) Skilled (%)

<1 year of 25 20 10
service

≥1 year of 10 5 5
service
All of the current workers have been with the company for at least one year.

Recruitment
Each year, it is possible to hire a limited number of employees in each classification
from outside the company as follows:
Semi-
Unskilled Skilled
skilled

500 800 500

Retraining
Each year, it is possible to train up to 200 unskilled workers to make them into semi-
skilled workers. This training costs the company $400 per worker.
In addition, it is possible train semi-skilled workers to make them into skilled workers.
However, this number can not exceed 25% of the current skilled labour force and
this training costs $500 per worker.
Lastly, downgrading workers to a lower skill level can be done. However, 50% of the
downgraded workers will leave the company, increasing the natural attrition rate
described above.
Layoffs
Each laid-off worker is entitled to a separation payment at the rate of $200 per
unskilled worker and $500 per semi-skilled or skilled worker.

Excess Employees
It is possible to have workers in excess of the actual number needed, up to 150
workers in total in any given year, but this will result in the following additional cost
per excess employee per year.
Semi-
Unskilled Skilled
skilled

$1500 $2000 $3000

Part-time Workers
Up to 50 employees of each skill level can be assigned to part-time work. The cost of
doing so (per employee, per year) is as follows:
Semi-
Unskilled Skilled
skilled

$500 $400 $400

Note: A part-time employee is half as productive as a full-time employee.
If the company’s objective is to minimize layoffs, what plan should they adopt in
order to do this?
If their objective is to minimize costs, how much could they further reduce costs?
How can they determine the annual savings possible across each job?
Problem Description
A farmer with a 200-acre farm wishes to create a five-year production plan.
Currently, he has a herd of 120 cows comprising 20 heifers (young female cows) and
100 adult dairy cows. Each heifer requires 2/3 of an acre to support it and each dairy
cow requires one acre.
On average, a dairy cow produces 1.1 calves per year. Half of these calves will be
bullocks that are sold shortly after birth for an average of $30 each. The remaining
calves, heifers, can either be sold for $40 or raised until age two when they will
become dairy cows. For the current year, all heifers identified for sale have already
been sold.
The general practice is to sell all dairy cows at the age of 12 for an average
of $120 each. However, each year an average of 5% of heifers and 2% of dairy
cows die. At present, the farmer’s herd of 120 cows is evenly distributed with 10
cows per age from newborn to 11 years old.
The milk from a dairy cow can be sold for $370 annually. The farmer can currently
house up to 130 cows, but this capacity limit can be increased for $200 per
additional cow.
Each dairy cow requires 0.6 tons of grain and 0.7 tons of sugar beet per year. Both
of these can be grown on the farm. Each acre can yield 1.5 tons of sugar beet.
However, only 80 acres are suitable for growing grain, and those acres have
different levels of productivity as follows:
Land
Area (Acres) Grain Production (Tons/Acre)
Group

Group 1 20 1.10

Group 2 30 0.90

Group 3 20 0.80

Group 4 10 0.65

Sugar beet can be bought for $70 a ton and sold for $58 a ton. Grain can be bought
for $90 a ton and sold for $75 a ton.
The annual labour requirements for cows as well as grain and sugar beet production
are as follows:

Labour Required (Hr/Year)

Heifer 10

Milk-producing Cow 42
 Labour Required (Hr/Year)

Acre Devoted to Grain 4

Acre Devoted to Sugar Beet 14

Other annual costs are as follows:

Cost (USD/Year)

Heifer 50

Milk-producing Cow 100

Acre Devoted to Grain 15

Acre Devoted to Sugar Beet 10

Labour currently costs the farmer $4000 per year and that cost provides 5,500 hours
of labour. Additional labour can be paid for at the rate of $1.20 per hour.
Any capital expenditure can be financed with a 10-year loan at 15% interest
annually. The interest and principal are paid back in 10 equal annual payments. It is
prohibited for the annual cash flow to be negative.
The farmer does not want to reduce the total number of dairy cows at the end of the
five-year period by more than 50%, nor does he want to increase their number by
more than 75%.
What plan should the farmer follow over the next five years in order to maximize
profit?