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Mr. Criticalpath operates an oil production company. The task of keeping the operation fully staffed with healthy workers is a difficult one for the
Mr. Criticalpath operates an oil production company. The task of keeping the operation fully staffed with healthy workers is a difficult one for the company. On average, 16 workers per week leave the operation, with a standard deviation of 8 workers per week. The company's policy is to ensure that the probability that no workers are available to replace departing workers does not exceed 3%. Recruiting new workers is costly, since it involves trucking them in from Commerce City, the nearest town which is some distance away from the production site. Each recruiting trip costs $5,000 for trucks and administration. It takes 2 weeks to dispatch the trucks, find willing workers, and return with them to the production site. Once new workers are recruited, they are hosted in a housing complex near the production facility, where they wait until there is a new vacancy in the oil production facility. During this waiting time, it costs the company $100 per week per worker in room and board. a) Suggest a recruiting policy for the company to meet their goal of minimizing recruitment and room and board costs, while keeping sufficient workers to meet their performance target. Your policy should detail when to initiate a recruiting trip and the number of workers to recruit on each trip. b) You have been hired as a consultant to re-examine the current policy. In qualitative terms, describe the argument you would make to justify reducing below 3% the probability of having no replacement workers available. (Please be specific in terms of what factors are key to your argument and how.)
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