Budget Allocation for Permanent and Contingent Capacity under Stochastic Demand.

We develop a model of budget allocation for permanent and contingent workforce under stochastic demand. The level of permanent capacity is determined at the beginning of the horizon and is kept constant throughout, whereas the number of temporary workers to be hired must be decided in each period. Compared to existing budgeting models, this paper explicitly considers a budget constraint. Under the assumption of a restricted budget, the objective is to minimize capacity shortages. When over-expenditures are allowed, both budget deviations and shortage costs are to be minimized. The capacity shortage cost function is assumed to be either linear or quadratic with the amount of shortage, which corresponds to different market structures or different types of services. We thus examine four variants of the problem that we model and solve either approximately or to optimality when possible. A comprehensive experimental design is designed to analyze the behavior of our models when several levels of demand variability and parameter values are considered. The parameters consist of the initial budget level, the unit cost of temporary workers and the budget deviation penalty/reward rates. Varying these parameters produce several trade-offs between permanent and temporary workforce levels, and between capacity shortages and budget deviations. Numerical results also show that the quadratic cost function leads to smooth and moderate capacity shortages over the time periods, whereas all shortages are either avoided or accepted when the cost function is linear.Stochastic; Capacity planning; Contingent workers; Budget allocation; Non-linear stochastic dynamic programming; Optimization;

Non-standard employment and mobility in the Netherlands

In the last 25 years the number of flexible jobs has been expanding in most European countries. For example, in the Netherlands in 1995, about 11 per cent of workers was working in a fixed-term temporary job and about 37 per cent of workers was working in a part-time job. Seven years later, in 2002 these percentages had increased to 14 per cent and 44 per cent. It should be noted however, that the increase in temporary jobs already reached 13 per cent in 1998 and is fairly stable since, whereas the percentage of part-time jobs is still increasing in 2002. For the purpose of this paper, the focus will be on several forms of contractual flexibilisation: temporary contracts , small part-time contracts , on-call and replacement contracts, casual and seasonal work and work with temporary work agencies. These jobs are all defined as non-standard employment.The labour market in the Netherlands is characterised by quite some mobility between the various labour market states. The high mobility rates between non-standard and standard jobs, except for the small jobs and on-call contracts as part of non-standard employment, provide arguments for defending the hypothesis that the Dutch labour market is not characterised by a clear-cut segmentation of non-standard and standard jobs. An important finding is that there is a high degree of path dependence in labour market transitions. Earlier experience in standard employment increases the transition probabilities into standard employment, both for the nonemployed and for non-standard workers. Earlier experience in either non-standard or non-standard employment also reduces the probability of ‘falling back’ into nonemployment. Previous unemployment does not reduce the chances of finding a job for the nonemployed but does reduce the chances of finding a standard job for non-standard workers.job mobility; non-standard employment; panel data; Netherlands

Capacity planning with working time accounts in services

This paper presents, formalises and classifies working time accounts (WTA’s), means of achieving flexible production capacity through the flexible organization of working time. We propose linear programming models to plan working time, using WTA, at companies in service industry. A computational experiment shows that the models can be solves for any planning problems of reasonable size

Budget allocation for permanent and contingent capacity under stochastic demand

We develop a model of budget allocation for permanent and contingent workforce under stochastic demand. The level of permanent capacity is determined at the beginning of the horizon and is kept constant throughout whereas the number of temporary workers to be hired must be decided in each period. Compared to existing budgeting models, this paper explicitly considers a budget constraint. Under the assumption of a restricted budget, the objective is to minimize capacity shortages. When over-expenditures are allowed, both budget deviations and shortage costs are to be minimized. The capacity shortage cost function is assumed to be either linear or quadratic with the amount of shortage, which corresponds to different market structures or different types of services. We thus examine four variants of the problem that we model and solve either approximately or to optimality when possible. A comprehensive simulation study is designed to analyze the behavior of our models when several levels of demand variability and parameter values are considered. The parameters consist of the initial budget level, the unit cost of temporary workers and the budget deviation penalty/reward rates. Varying these parameters produce several trade-off between permanent and temporary workforce levels, and between capacity shortages and budget deviations. Simulation results also show that the quadratic cost function leads to smooth and moderate capacity shortages over the time periods, whereas all shortages are either avoided or accepted when the cost function is linear

Affectation flexible des ressources sur les activités industrielles : caractérisation et modélisation

Ce travail présente la modélisation et les conséquences de la prise en compte, en matière de planification d’activités industrielles, de la flexibilité des ressources humaines. En matière de modélisation, nous présentons deux aspects de la flexibilité, liés l’un à la modulation du temps de travail, et l’autre à la diversité des activités qui peuvent être accomplies par une ressource donnée. Les retombées concernent aussi bien la planification initiale des activités que la combinatoire liée aux choix d’affectation des ressources, sans oublier les méthodologies de réduction de conflits résultant de ces choix d’affectation

An integrated approach to inventory and flexible capacity management subject to fixed costs and non-stationary stochastic demand

In a manufacturing system with flexible capacity, inventory management can be coupled with capacity management in order to handle fluctuations in demand more effectively. Typical examples include the effective use of temporary workforce and overtime production. In this paper, we discuss an integrated model for inventory and flexible capacity management under non-stationary stochastic demand with the possibility of positive fixed costs, both for initiating production and for using contingent capacity. We analyze the characteristics of the optimal policies for the integrated problem. We also evaluate the value of utilizing flexible capacity under different settings, which enable us to develop managerial insights. © 2008 The Author(s)

Scheduling Workforce Relief Breaks In Advance Versus In Real-Time

This paper focuses upon employee rest breaks, or reliefs, in workforce scheduling. Historically, the workforce scheduling literature has largely ignored reliefs, as less than 18% of the 64 papers we surveyed scheduled reliefs. The argument has been that one need not schedule reliefs in advance, since they can easily be scheduled in real-time. We find this argument to be flawed. We show that failing to schedule reliefs in advance will have one of two undesirable outcomes. First, there will be a less profitable deployment of labor should all reliefs actually be taken in real-time. Second, if some reliefs are never assigned or if relief-timing restrictions are relaxed so that more reliefs may be assigned in real-time, there will be a disgruntled and less productive workforce and perhaps violations of contractual obligations. Our findings are supported by anecdotal evidence drawn from commercial labor scheduling software

A Theoretical And Empirical Investigation Of The Impact Of Labor Flexibility On Risk And The Cost Of Equity Capital

This paper analytically and empirically investigates the linkage between labor costs and a firm’s income volatility, equity risk, and cost of capital. While the relationship between labor costs and the firm’s cost of capital under uncertainty conditions is important, there has been little research examining this issue. While we control for fixed labor costs, we focus on labor flexibility effects as the U.S. temporary staffing sales for 2005 totaled $69.5 billion, 8.5% more than in the previous year (American Staffing Association, 2007). Within the Capital Asset Pricing Model (CAPM) framework, we demonstrate analytically and empirically that labor flexibility reduces income volatility, equity risk and cost of capital in the service industry. However, we find that labor leverage has no impact on income volatility, and increases equity risk and cost of equity capital. These results suggest that managers can structure labor costs to minimize the firm’s risk and maximize shareholder value

Non-standard employment and mobility in the Netherlands

In the last 25 years the number of flexible jobs has been expanding in most European countries. For example, in the Netherlands in 1995, about 11 per cent of workers was working in a fixed-term temporary job and about 37 per cent of workers was working in a part-time job. Seven years later, in 2002 these percentages had increased to 14 per cent and 44 per cent. It should be noted however, that the increase in temporary jobs already reached 13 per cent in 1998 and is fairly stable since, whereas the percentage of part-time jobs is still increasing in 2002. For the purpose of this paper, the focus will be on several forms of contractual flexibilisation: temporary contracts , small part-time contracts , on-call and replacement contracts, casual and seasonal work and work with temporary work agencies. These jobs are all defined as non-standard employment.The labour market in the Netherlands is characterised by quite some mobility between the various labour market states. The high mobility rates between non-standard and standard jobs, except for the small jobs and on-call contracts as part of non-standard employment, provide arguments for defending the hypothesis that the Dutch labour market is not characterised by a clear-cut segmentation of non-standard and standard jobs. An important finding is that there is a high degree of path dependence in labour market transitions. Earlier experience in standard employment increases the transition probabilities into standard employment, both for the nonemployed and for non-standard workers. Earlier experience in either non-standard or non-standard employment also reduces the probability of ‘falling back’ into nonemployment. Previous unemployment does not reduce the chances of finding a job for the nonemployed but does reduce the chances of finding a standard job for non-standard workers

Staffing decisions for heterogeneous workers with turnover

In this paper we consider a firm that employs heterogeneous workers to meet demand for its product or service. Workers differ in their skills, speed, and/or quality, and they randomly leave, or turn over. Each period the firm must decide how many workers of each type to hire or fire in order to meet randomly changing demand forecasts at minimal expense. When the number of workers of each type can by continuously varied, the operational cost is jointly convex in the number of workers of each type, hiring and firing costs are linear, and a random fraction of workers of each type leave in each period, the optimal policy has a simple hire- up-to/fire-down-to structure. However, under the more realistic assumption that the number of workers of each type is discrete, the optimal policy is much more difficult to characterize, and depends on the particular notion of discrete convexity used for the cost function. We explore several different notions of discrete convexity and their impact on structural results for the optimal policy.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/45844/1/186_2005_Article_33.pd