Solving a staffing problem with annualized hours, multiskilling with 2-chaining, and overtime: A retail industry case

Abstract

This study provides a new perspective regarding the potential benefits of combining three different labor flexibility strategies to solve an annual staffing problem. These labor flexibility strategies are as follows: (i) annualized hours, which allows an irregular distribution (e.g., weekly, monthly) of an annual number of working hours per employee hired; (ii) multiskilling with 2-chaining, which involves employees being trained to work on up to two task types, so that the training structures form closed chains; and (iii) overtime. A mixed integer linear programming model is proposed to determine how many employees will be hired, how many of them will be multiskilled and in what task types, and how will be the weekly allocation of ordinary and overtime hours for each employee type (single-skilled or multiskilled) according to the agreed annualized hours contract. For a case study in the Chilean retail industry, the results showed that the proposed triple labor flexibility strategy reported greater savings in total cost compared to the single or double flexibility strategies. The results also indicated that multiskilling and overtime are complementary sources of flexibility under an annualized hours contract. In fact, for different store sizes, patterns of seasonality in demand and levels of variability in demand, the proposed strategy achieves close to 100% coverage in demand and over/understaffing levels of approximately 0%.