Strategic Modelling and Business Dynamics: A Feedback Systems Approach

5.5. Equation Formulations in Workforce Management

We begin with the workforce equation, which is formulated as an asset stock accumulation. In Figure 5.21, the workforce at time t is equal to the workforce at time t−1 plus the difference between the hiring rate and the departure rate over the interval dt. The initial workforce is 200 workers, deliberately chosen so that the factory starts in a perfect supply-demand equilibrium with production equal to shipments of 1 000 refrigerators per month. This equilibrium number of workers is obtained by dividing demand of 1 000 by worker productivity of five refrigerators per worker per week. The hiring rate is the sum of the average departure rate and workforce adjustment, a formulation we will return to later in the equations for hiring.

5.5.1. Departure Rate – Standard Formulation for Stock Depletion

The departure rate depends on the ratio of workforce to normal length of stay. Intuitively, the ratio makes sense. The more workers employed in a factory the more of them are likely to leave in a given period of time simply as a result of normal turnover. On the other hand, the longer the normal length of stay, the fewer workers will leave in a given period. Here we assume that the normal length of stay is 50 weeks, so with an initial workforce of 200 workers the departure rate is 200/50, four workers per week. Notice that the dimensions of the equation balance properly. By dividing the number of workers by the normal length of stay in ...