The behavior in paint consumption is seasonal, reflecting certain cyclical trends in the market. During Q1 and Q2, paint sales increase because most of the construction and development projects are done during this time. On Q3 however, sales are weaker because of the rainy season, which serves as a deterrent for painting. Sales slightly rebound on Q4 as a result of the positive cash and investment inflow to the country during this time. As such, the employment period will be divided into four (4 quarters) and this will serve as the hiring and firing stage. As previously mentioned, Globesco will need to devise a hiring/firing policy because they will be obtaining a new division for the new strategy. For simplicity’s sake, we assume that the employees for this division are all painters. Aside from that, Globesco aims to provide the best quality possible paint service and as a result, it will be very costly to train painters.
As previously stated, the paint industry is subject to considerable seasonal fluctuations. However, it is also very costly to hire and train painters and it is very difficult to lay off workers during slack seasons. Nevertheless, Globesco will need to balance and weigh the cost of having a shortage or an excess number of painters. Continuous dynamic programming will be the approach in solving this dilemma. The objective is to minimize the cost. The following are the estimated number of painters needed per quarter:
The number of painters needed per quarter is derived from the expected number of paint services per quarter. Basically, there are 3 ways to forecast the expected number of paint services namely, supply, demand, and through the target sales. The third method was used to obtain the total number of paint jobs needed. By calculating the break-even using the unit contribution margin and the amount of fixed costs (as shown), it is estimated that the target should be an estimated 500 paint jobs during the first year.... [continues]
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