Labor Scheduling, Part 1: Forecasting Demand

Abstract

This paper focuses on forecasting demand for services, the first of a four-part series on developing effective workforce schedules. Serving customers well, at a reasonable cost, requires the proper number and mix of employees. Scheduling too many employees means high labor costs, while scheduling too few workers can mean poor service that drives away business. Forecasting customer demand involves eight steps: determine the nature of the work, identify those factors that generate the work (i.e., the labor drivers), determine whether the labor drivers are time variant or time invariant, determine the time interval for tracking the time-variant labor drivers, forecast the time-variant labor drivers, smooth those forecasts, track the error in those forecasts, and define the allowable window for controllable work. Balancing employees' skills and availability, plus governmental regulations, company policies, and contractual obligations regarding work schedules, can be a manager's nightmare.