Workforce planning and financing on a production/capital discrete‐time model

Abstract

Traditionally, companies have considered production planning and financial commitments separately. Production planning involves planning when to produce how much of a product, while the financial commitment considers which loans to take and how to repay them. In the current difficult financial environment with new challenges and with different opportunities, such as short‐term flexible loans for paying salaries, these related problems must be considered together. In this paper, we model the two processes (production and cash flows) in a single framework, using a mixed‐integer programming discrete‐time formulation. When taken individually, each of the problems has been thoroughly discussed in the literature, while the combined version that also incorporates labor financial costs and workforce sizing is more scarce. The main contribution of the paper involves new strategies for financing labor costs in strong agreement with the company's production plan and financial commitments. The new strategy relates credit ceiling with employment funding, using a sequence of flexible short‐term loans. We consider applications and propose mathematical programming based tools that can be used by companies’ managers for conducting their own solutions analysis, following their own findings and discussion of alternative scenarios.

Planning Production and Workforce in a Discrete-Time Financial Model Using Scenarios Modeling

“…Shortfalls in cash-balance are not permitted in all periods of the planning stream. Note that, as observed in [16], to concede shortfalls is the same as getting interest-free loans.…”

“…The integration of cash-flows and workforce along the production process has also been discussed in [10,13,[15][16][17]. The formulation proposed in [13] includes financial aspects to support labor costs and production.…”

“…Other investments, apart from production, are also incorporated in the model. Mathematical formulations integrating these three elements system was also proposed in [16] and in [15], considering short-term loans to support labor costs with flexible amortization plans. The associated production process is single-product and single-level, using the given demand amounts as upper bounds for the effective sales, allowing the model to find the appropriate production quantities, to the best convenience of the company, in order to get the best financial profits.…”

“…Our model combines the three mentioned processes, including short-term loans strategies, with the objective to maximize the final period cash-flows. In addition, we do not force the sales to entirely meet the demand, but using the demand level as an upper limit for the sales strategy, as in [16] and in [15]. Hiring strategies are modeled by a sequence of overlapping work-shifts.…”

Production Decisions of Manufacturing and Remanufacturing Hybrid System Considering Downward Substitution: A Comprehensive Model Integrating Financial Operations

“…Although some literature has shown that it is necessary to take financial factors into account when formulating production operation models, most researchers don't pay attentions to relative studies. Moreover, considering financial factors, existing papers mostly focus on traditional manufacturing systems and supply chain [32][33][34][35][36]. Few papers conduct the related research focusing on the closed-loop supply chain decisions and manufacturing/remanufacturing decisions.…”