Annualised Hours: A Real Flexibility Tool
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The 0 R Society OR Insight Vol. 18
1551J£ 1
January -March 2005
Annualised Hours: A Real Flexibility Tooll Albert Cor-orrrin as ; AOlaia Lusa 2; Rafael Pastor Research Institute IOC I Engineering School of Barcelona Universitat Politecnica de Catalunya Av. Diagonal 647, 11 th floor, 08028, Barcelona (Spain)
Annualising working hours (AH) is a mean to face the seasonal nature qf the demand. AH provides much flexibility to the production system, so the company is allowed to plan the staff working time more efficiently. However, the introduction qf AH entails new optimisation problems to solve) as is the working time planning problem. These problems should besolved in an efficient wq:y so AH could be a real and operative flexibility tool. Mixed andinteger linearprogramming has been shown as a very iffictive approach in the resolution qf some real and artificial generated AH problems.
Oke (2000) carries out a survey to more than 500 manufacturing plants of the UK and analyses the applicability of some flexibility enablers: overtime, part-time, temps, job sharing, annual hours (AH), subcontracting, contract employees, varying lead times and rejecting orders. In the results, approximately 40% of the companies considers AH as one of the most desirable options, mainly; because of its low cost; however) it is still presented as a not very used option (around 10%).
Introduction: annualising working hours There are basically two ways to face the seasonal nature of the amount and the composition of the demand: to accumulate inventory (when possible) or to endow the company with enough flexibility to adjust production capacity to demand.
Annualising hours (AH) consists in distributing throughout the year the total amount of the staff's working hours, respecting some bounds and rules established in law and the collective bargaining agreement. This way; each worker can carry out different working weeks throughout the year and the company can plan the longest working weeks in high demand periods and the shortest in low demand periods. Under AH, the harmonization between demand and capacity is a real possibility.
Volume flexibility (the quickness and ease with which plants can respond to changes in the amount and composition of the demand) can be achieved in many ways but, as it is pointed out in Slack (1991), one of the main sources of volume flexibility is the flexibility of human resources. This statement is particularly true in many service industries, since the only option they have to adapt on demand is to increase or to diminish the number of present workers in the working place. This way; these companies could adapt the workers' working hours or adapt the number of company workers, but this last option has usually some greater costs.
Although some early antecedent of AH can be found (e.g., in 1956 three hundred workers of Sevalco, in Avonmouth, UK, were employed on a shift system based on AH), the first significant cases of AH date from the seventies) when some French, German and Scandinavian companies began to use
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