Q2: You are the co-founder of a boutique consulting firm with expertise in characterizing microbial communities in the environment. The main service you provide is analyzing soil samples to help producers understand and improve their overall soil health to increase yields. Due to the nature of this business, it is seasonal (aligned with the growing season), and as you prepare to scale-up you need to figure out how many employees you should employ in order to maximize your profits. The following information describes your business in more detail: - Employees capable of doing this work earn $22/hr in direct compensation +$8/hr in benefit costs. - Hiring and training costs average $2500 /employee. - Running the analysis, analyzing the data, writing up the report, and interfacing with the client takes 10 hours. That is, each employee completes 1/10 unit of production per hour. - In addition to your labor costs, you have $450 /sample in material/overhead costs - Due to the nature of the work and promises you've made to your workforce, employees cannot be asked to work more than 40 hours/week. In addition, you've committed to paying them at least 30 hours/week in order to bolster retention, and your organization is committed to providing yearround employment (i.e., not laying-off employees). - Demand (and pricing) for your service is as follows (because you provide a service, you cannot carry-over any surplus/shortage from quarter to quarter): In order to maximize your annual profit (use the GRG nonlinear solver- set tolerance to .000001 ): 1. How many employees should you employ? 2. What is vour nroiested notarterlv and total nrofit? 3. Do you have any quarterly losses? If so, does this make sense? Why or why not? 4. Strategy wise, which quarter is driving your labor demand? Briefly explain what value or pattern in the results supports your answer. 5. One of your scientists thinks she might be able to reduce the material costs associated with running your analysis to $350 /unit. How would you expect this to change your results and why? 6. Now, re-optimize and see what you find. NOTE: Set the number of employees and hours worked per week in each quarter to 5 before re-running your solver a. Number of employees: 7. Practically speaking, what does this change bring about and why? Q2: You are the co-founder of a boutique consulting firm with expertise in characterizing microbial communities in the environment. The main service you provide is analyzing soil samples to help producers understand and improve their overall soil health to increase yields. Due to the nature of this business, it is seasonal (aligned with the growing season), and as you prepare to scale-up you need to figure out how many employees you should employ in order to maximize your profits. The following information describes your business in more detail: - Employees capable of doing this work earn $22/hr in direct compensation +$8/hr in benefit costs. - Hiring and training costs average $2500 /employee. - Running the analysis, analyzing the data, writing up the report, and interfacing with the client takes 10 hours. That is, each employee completes 1/10 unit of production per hour. - In addition to your labor costs, you have $450 /sample in material/overhead costs - Due to the nature of the work and promises you've made to your workforce, employees cannot be asked to work more than 40 hours/week. In addition, you've committed to paying them at least 30 hours/week in order to bolster retention, and your organization is committed to providing yearround employment (i.e., not laying-off employees). - Demand (and pricing) for your service is as follows (because you provide a service, you cannot carry-over any surplus/shortage from quarter to quarter): In order to maximize your annual profit (use the GRG nonlinear solver- set tolerance to .000001 ): 1. How many employees should you employ? 2. What is vour nroiested notarterlv and total nrofit? 3. Do you have any quarterly losses? If so, does this make sense? Why or why not? 4. Strategy wise, which quarter is driving your labor demand? Briefly explain what value or pattern in the results supports your answer. 5. One of your scientists thinks she might be able to reduce the material costs associated with running your analysis to $350 /unit. How would you expect this to change your results and why? 6. Now, re-optimize and see what you find. NOTE: Set the number of employees and hours worked per week in each quarter to 5 before re-running your solver a. Number of employees: 7. Practically speaking, what does this change bring about and why
