Assignment 1 - Grade: DI PDF

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Assignment 1 ...

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Case Study Subject Code: OMGT2146

Subject Name: Supply Chain Analysis and Design (1950)

Location & Campus City Campus where you study: Title of Assignment: Case Study

Weight: 20% Student name: Nguyen Do Nam Long Student Number: S3695698

Teacher’s Name: Mr. Masih Fadaki

Assignment due date: Week 6, Sun 1 Sep, 5:00 pm

"I declare that in submitting all work for this assessment I have read, understood and agree to the content and expectations of the Assessment Declaration"

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Minimum total cost - Determine the number of temporary employees Renova should hire each month under each contract plan in order to meet the projected needs. Question 1: A schedule that shows the number of temporary employees that Renova should hire each month for each contract option. (8 marks: 4 marks for developing mathematical model and 4 marks for reproduction of the model in Excel and solving the problem) Complete Linear Programming Model: Define the decision variables - Xij: the number of temporary employees Renova should hire each month under each contract plan. January

February

$1800

$1800

March

April

May

June

Option 1 X11

X21

$1800 X31

$1800 X41

$1800 X51

$1800 X61

Option 2 $4000 X12

$4000 X22

$4000 X32

$4000 X42

$4000 X52

$4000 X62

Option 3 $6200 X13

$6200 X23

$6200 X33

$6200 X43

$6200 X53

$6200 X63

Objective function is: Min Z = (1800X11 + 4000X12 + 6200X13 + 1800X21 + 4000X22 + 6200X23 + 1800X31 + 4000X32 + 6200X33 + 1800X41 + 4000X42 + 6200X43 + 1800X51 + 4000X52 + 6200X53 + 1800X61 + 4000X62 + 6200X63) + (X11 + X12 + X13 + X21 + X22 + X23 + X31 + X32 + X33 + X41 + X42 + X43 + X51 + X52 + X53 + X61 + X62 + X63) * 700 The constraints is: 2

X11 + X12 + X13 = 15 (Employee Expected in January) X21 + X22 + X23 + X12 + X13 = 10 (Employee Expected in February) X31 + X32 + X33 + X22 + X23 + X13 = 5 (Employee Expected in March)

X41 + X42 + X43 + X32 + X33 + X23 = 32 (Employee Expected in April) X51 + X52 + X42 + X43 + X33 = 25 (Employee Expected in May) X61 + X52 + X43 = 10 (Employee Expected in June) X53, X62, X63 = 0 (No contractual obligations extend beyond June) Xij must be integer The last one is: Xij >= 0 (Non-negativity) Excel Model Reproduction:

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Setting Solver Parameters

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Proposed Solution:

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The minimum total cost is $227,500 Question 2: A summary table that shows the number of temporary employees that Renova should hire under each contract option, the associated contract cost for each option, and the associated training cost for each option. Provide summary totals showing the total number of temporary employees hired, total contract costs, and total training costs. (4 marks) SUMMARY TABLE Contract Option

Number of Temporary Employees

Contract Cost

Training Cost

1

12

$ 21600

$ 8400

2

20

$ 80000

$ 14000

3

15

$ 93000

$ 10500

Total

47

$ 194600

$ 32900

Question 3: Suppose that Renova hired 5 full-time employees at the beginning of January in order to satisfy part of the labour requirements over the next six months. If Renova can hire full-time employees for $25 per hour, including fringe benefits, what effect would it have on total labour and training costs over the six-month period as compared to hiring only temporary employees? Assume that full-time and temporary employees both work approximately 168 hours per month. Provide a recommendation regarding the decision to hire additional full-time employees. (4 marks) 6

When Renova employs 5 full-time employees for $ 25 per hour, the total cost that Renova must pay over the next 6 months to the 5 employees is shown in the table below:

When Renova decided to hire 5 full-time employees, the demand for temporary employees per month would decrease to 5 units as follows: Month

January

February

March

April

May

June

Employee Expected

10

5

0

27

20

10

When the demand for temporary employees changes, we begin to recalculate the total costs of hiring temporary employees. We repeat the same steps as Question 1, but only change the number of temporary employees required. The result is:

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The next step will be to provide a comparison table between the two options of hiring only temporary staff and hiring 5 full-time employees along with hiring additional temporary staff for 6 months.

Based on the comparison table above, it is easy to see that if the plan to hire 5 full-time employees combination with temporary employees, the total spending in 6 months will be much higher than that only hiring temporary staff. Although the total cost of training for staff will decrease, the range of expenses that will be reduced is negligible. Because the company offered a determined salary to full-time employees that was too high, higher than that paid to temporary employees, it was inefficient. The option to hire full-time employees will work if the hourly wages of those employees fall below $13 per hour.

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Question 4: If the cost to train each temporary employee could be reduced to $500 per month, what effect would this change have on the hiring plan of part 1? Explain. Discuss the implications that this effect on the hiring plan has for identifying methods for reducing training costs. How much of a reduction in training costs would be required to change the hiring plan? (4 marks) When the amount of staff training is reduced to $500, the total cost will be reduced. However, this change did not affect the recruitment plan in Question 1.

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Because the company's recruitment plan is set out to meet the needs of employees with the lowest cost. Besides, this criterion must also meet the cost for the training session must also be at a minimum. Although salaries paid to temporary employees increase in increments over the time they work (1 month - $ 1800, 2 months - $ 4000, 3 months - $ 6200). However, the amount of training costs for these 3 types of employees is the same. If sum and divide by each month, the total cost will be paid each month for these 3 types of employees will change:

In addition, when training costs drop to $ 500, the average monthly pay for these three types of employees is still in descending order from one-month employees to twomonth employees and finally is three-month employees.

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Because the amount of money paid to employees by the 1-month term is still the highest, the company's recruitment plan remains unchanged from Question 1. Therefore, we need to reduce the training cost so that the average cost per month (including salaries and training costs) of the 1-month staff is lower than the other types of employees. In other words, the training fee must be less than $400 in order to change the recruitment plan.

When training costs drop to $ 399, it not only reduces the total minimum cost but also changes the recruitment plan.

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