A common problem for firms that provide professional services requiring multiple skill types in a single project or in different types of projects is how to allocate employees to branch offices across multiple locations. Projects with varying skill requirements arise in these locations concurrently and multiple skills may be needed on a single project. The firm will lose projects if people of the correct skills are not available when a project arrives at a location. People can travel between locations to fill projects, but at some cost. Management consulting companies are typical examples of these service businesses. We develop a Markov model for a firm having employees with two skill types across two locations. Even for such a simple model, we resort to a numerical (but exact) solution. This model can be used as a baseline for comparison for more general models in the future. Using the model we derive useful insights on the performance of the service business in terms of revenue, cost, and profit. Such insights are helpful to the development of staffing strategies for service providing organizations.
By: Ying Tat Leung; Jesse Bockstedt; Wolfgang König
Published in: RJ10442 in 2009
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