Case Problem 2: Phoenix Computer
1. The monthly cost of a new employee is $2,250 = $27,000/12. The training program is 3
months for a new employee and costs $1,500. So the total cost of hiring a new employee and
training her/him to be a laptop specialist is $8,250 = 3($2,250) + $1,500.
2. The training program is only 2 months for current employees and costs $1,000. So a
replacement employee will only need to be hired 2 months before the laptop specialist is
needed in this case. So the incremental cost of putting a current employee through the
training program is $5,500 = 2($2,250) + $1,000.
3. It is clear that 100 new employees will need to be hired either to become laptop specialists
themselves or to replace current employees who will become laptop specialists. So the
company's monthly payroll cost will increase by $225,000 = 100($2,250) in September over
January.
A linear program can be formulated and solved to minimize the cost of hiring and training
over the period from February to August. The following variable definitions are used:
Feb 3 = No. of new employees entering the 3-month program in February
•
Jun 3 = No. of new employees entering the 3-month program in June
Mar 2 = No. of current employees entering the 2-month program in March
•
•
Jul 2 = No. of current employees entering the 2-month program in July
IdleMay = No. of trained laptop specialists in excess of those needed in May
•
•
IdleSep = No. of trained laptop specialists in excess of those needed in September
There are 16 constrains needed. The first 5 deal with meeting the needs for laptop
specialists. Constraints (6) through (10) restrict the number of current employees that may
enter the program while Constraints (11) through (16) deal with the capacity of the training
center.
The following output from The Management Scientist shows a model and solution that can
be used to answer the questions in part 3.
LINEAR PROGRAMMING PROBLEM
MIN
8250Feb3+5500Mar2+2250IdleMay+8250Mar3+5500Apr2+2250IdleJun+8250Apr
3+55 00May
2+2250IdleJul+8250May3+5500Jun2+2250IdleAug+8250Jun3+5500Jul2+2250
IdleS ep
S.T.
1) 1Feb3+1Mar2-1IdleMay=20
2) 1Feb3+1Mar2+1Mar3+1Apr2-1IdleJun=30
3) 1Feb3+1Mar2+1Mar3+1Apr2+1Apr3+1May2-1IdleJul=85
4) 1Feb3+1Mar2+1Mar3+1Apr2+1Apr3+1May2+1May3+1Jun2-1IdleAug=85
5)
1Feb3+1Mar2+1Mar3+1Apr2+1Apr3+1May2+1May3+1Jun2+1Jun3+1Jul2-IdleSep
=100
6) 1Mar2<15
7) 1Mar2+1Apr2<35
8) 1Mar2+1Apr2+1May2<35
9) 1Mar2+1Apr2+1May2+1Jun2<40
10) 1Mar2+1Apr2+1May2+1Jun2+1Jul2<50
11) 1Feb3<25
12) 1Mar2+1Mar3<25
13) 1Apr2+1Apr3<25
14) 1May2+1May3<25
15) 1Jun2+1Jun3<25
16) 1Jul2<25
OPTIMAL SOLUTION
Objective Function Value = 698750.000
Variable Value Reduced Costs
-------------- --------------- ------------------
Feb3 10.000 0.000
Mar2 10.000 0.000
IdleMay 0.000 2250.000
Mar3 15.000 0.000
Apr2 0.000 2250.000
IdleJun 5.000 0.000
Apr3 25.000 0.000
May2 25.000 0.000
IdleJul 0.000 4500.000
May3 0.000 2250.000
Jun2 0.000 0.000
IdleAug 0.000 2250.000
Jun3 0.000 0.000
Jul2 15.000 0.000
IdleSep 0.000 10500.000
Constraint Slack/Surplus Dual Prices
-------------- --------------- ------------------
1 0.000 0.000
2 0.000 2250.000
3 0.000 -2250.000
4 0.000 0.000
5 0.000 -8250.000
6 5.000 0.000
7 25.000 0.000
8 0.000 0.000
9 5.000 0.000
10 0.000 2750.000
11 15.000 0.000
12 0.000 0.000
13 0.000 2250.000
14 0.000 2250.000
15 25.000 0.000
16 10.000 0.000
