Ratio Analysis

The Michiana State University is a relatively small, liberal arts school supported by state funding. Approximately
6,000 students attend the school. It employs 75 full-time professors of different ranks as well
as a total of 60 custodians, cafeteria workers, and other civil servants. The school is in the centre of one of the fastest
growing population centres in Michigan. A majority of new students—about 4,000—are expected to enrol in business
courses. The remaining 2,000 will enrol in all other disciplines. At present, 18 full-time business professors serve 4,000
business students. These professors teach full time (three classes/semester) and have no additional time at present to handle
more students.

Question:

1. Divide the number of business students presently enrolled by the number of professors (4,000 students-to-faculty
ratio). Now divide the remaining students enrolled in the university by the number of professors available to serve
them (students-to-faculty ratio).

i. = 4000 student / 18 professors

= 4000/18
= 222.22222222222

Thus, the ratio of business program is 222 students : 1 professor.

ii. = 2000 student / 57 professors (75 full-time professors – 18 full-time business professors)
= 2000/57
= 35

Thus, the ratio of other programs is 35 students : 1 professors.

2. Discuss the implications of this difference in ratio on faculty members in the business program.
Answer should highlight below point with elaborations

The business faculty are facing too-high of student-to-faculty ratio, with large numbers of
students supported by only a single professor, which is 222 students : 1 professor. These are
the implication:

i. Students attend university to gain direct knowledge from expert faculty

members; however, with too many students to attend to, instructors may be
drowning in paperwork, curriculum development, and grading.
ii. With high batches, the professors aren’t able to identify their students
individually. For students, they have less opportunities to engage or interact
with their instructors. Hence, the competition for the professors’ time and
attention is high among the students. Thereby, it could impact the student’s
grades and scores.
 Sales Level No of Marketing
Personnel
($ Millions)

5 12

6 20

8 38

11 67

22 79

a. Forecast the number of marketing personnel required for $13 million and $19 million of
sales activity

x y xy x² y²
5 12 60 25 144
6 20 120 36 400
8 38 304 64 1444
11 67 737 121 4489
22 79 178 484 6241
52 216 2959 730 12718

Hence, x ̅ = 52/5 = 10.4 ȳ = 216/5 = 43.2

2959−5(10.4 )(43.2)
B = A = 43.2-3.77(10.4)
730−5 (10.4 ) ²
2959−2246.4
= = 43.2-39.208
730−540.8
712.6
= = 3.92 #
189.2
= 3.77 #
 Sales Level No of Marketing
Personnel
($ Millions)

5 12

6 20

8 38

11 67

13 53

19 76

22 79

Y = 3.92+3.77(13) Y = 3.92+3.77(19)

= 52.93 = 75.55

= 53 # = 76 #
 b. Calculate the relationship between sales level and marketing personnel, indicate the
strength and magnitude.

The coefficient correlation (r) is 0.9.

Hence, there is a strong relationship between forecasted sales and number of employees. Increase
in forecasted number of sales will increase number of required employees in organisation.
 Exercise HR staffing Table

Question 1

• The Ski Manufacturing forecasted sale for its company. It is estimated that $30-$40 million
the number of marketing staff would be 20, HR executive 15 and financial officer would be 6,
and purchasing staff would be 10.

• Meanwhile, current employees of this organization are 471 employees including 1 Managing
Director, 1 President and 1 vice President in which the position are maintained. 9% from the
total employees are marketing staff, 2% Hr staff, 2% are financial and 5% purchasing staff in
which they are all needed for the company to serve $50-$60million sales

• Fill in the HR budgeting Table.

The Ski Manufacturing

STAFF DEMAND SALES ($ MILLIONS)

REQUIREMENTS
Administrative Positions $ 30-40 $ 50-60
Managing Director 1 1
President 1 1
Vice President 1 1
Marketing staff 20 42
HR staff 15 9
Financial staff 6 9
Purchasing staff 10 24
 Question 2

• The Regal Corporation forecasted sale for its company. It is projected that $10-$20 million
the number of marketing staff would be 11, HR executive 5 and financial officer would be 6,
and purchasing staff would be 5.

• Meanwhile, current employees of this organization are 200 employees excluding 1

Managing Director, 1 President and 1 vice President in which the position are maintained.
9% from the total employees are marketing staff, 2% Hr staff, 2% are financial and 5%
purchasing staff in which they are all needed for the company to serve $1-$10million sales

• Fill in the HR budgeting Table.

The Regal Corporation

STAFF DEMAND SALES ($ MILLIONS)

REQUIREMENTS
Administrative Positions $ 1-10 $ 10-20
Managing Director 1 1
President 1 1
Vice President 1 1
Marketing staff 18 11
HR staff 4 5
Financial staff 4 6
Purchasing staff 10 5
 Exercise Determining Net HR Requirement

1. Loxley company currently have 5,609 workers. Loxley brands are famous in western
European. The company had an overall annual historical employees’ replacement/loss rate
at 13%. Loxley desire to increase its growth rate at 8%.

a. Calculate net supply requirement (3M)

[External supply = current workforce x (replacement/loss rate % + change %)]

= 5609 x (13% per year + 8% per year)

= 5609 (0.13+0.08)
= 5609 (0.21)
= 1177.89
= 1178 #

b. Explain the result. (3M)

Loxley company faces personnel shortage of 1,178 people. Thus, they need to hire
1,178 people from the external supply.

2. Steel production located in West coast of Carolina are now having a financial crisis. The
pandemic just worsens the situation. The CEO of the company propose merging with RT
company which RT be would very interest to do so and rebranding it to RsTeel
manufacturing. Steel company current employees are 7800, and had overall historical rate
replacement/loss at of 9%. To merge with RT company, Steel production need to cut off 468
employees.

a. Calculate net supply requirement for downsizing Steel production? (3M)

[External supply = current workforce x (replacement/loss rate % + change %)]

468 = 7800(0.09) + 7800(-x)

468 = 702 + 7800(-x)
7800(x) = 702 – 468
7800(x) = 234
x = 234/7800
x = 0.03

change percentage % = 3%

Thus,

= 7800 (0.09 + (-0.03))

= 702 – 234
= 468 # employee need to cut off
b. If downsizing is the final resort, what initiatives could human resource department
take for the reputation of the company? (2M)
i. Hiring freeze
ii. Early retirement

c. Initially, RT had 10,000 employees, after merging with steel production what is the
number of employees RsTeel manufacturing? (3M)

RT employees = 10000 Steel employees = 7332 (after downsizing)

Thus,

= 10000+7332

= 17332 #

The total number of employees RsTeel manufacturing is 17,332.

d. RsTeel believe that after few years of merging, this company would gain profit
double than it used to be. RsTeel annual historical rate of replacement/loss is 9%,
and would like to have future growth at 13%.

I. Calculate the net supply (3M)

[External supply = current workforce x (replacement/loss rate % + change %)]

= 17332 (0.09+0.13)
= 17332 (0.22)
= 3813.04 #

II. explain the result. (3M)

RsTeel company faces personnel shortage of 3,813 people. Thus, they need
to hire 3,813 people from the external supply.
 Index/trend Analysis

(Sales [$
number of Thousand]
year sale (thousands)
employees per
Employee)
2019 2800 155
2020 2900 200
2021 3300 223
2022 3500 225
2023 3600
2024 3900
2025 4200
2026 4500
2027 6000
2028 6800

1) Forecasting labour demand for 2023-2028 and therefore sales figures for those years.

(Sales [$
number of Thousand]
year sale (thousands)
employees per
Employee)
2019 2800 155 18.06
2020 2900 200 14.50
2021 3300 223 14.80
2022 3500 225 15.55
2023 3600 232 15.55
2024 3900 251 15.55
2025 4200 270 15.55
2026 4500 289 15.55
2027 6000 386 15.55
2028 6800 437 15.55
 Markov Analysis

A1= sales representative, A2= sales manager, B1= customer service representative, B2=
customer service manager

1. Calculate and interpret the result of each level of job category (promoted, demoted,
transferred, exit)

(B) PEDICTING SUPPLY

YEAR 2022 (EXPECTED)
CATEGORIES CURRENT A1 A2 B1 B2 OUT
& JOB WORKFORCE
LEVELS
YEAR A1 100 60 10 20 0 10
2021 A2 20 1 12 0 0 7
B1 200 10 0 120 10 60
B2 15 0 0 0 12 3
PREDICTED SUPPLY 71 22 140 22 80
a. Sales Representative (A1)
i. In Part B (predicting supply), in the year 2021, the total number of sales
representative (A1) is 100.
ii. It is expected that in 2022, 60 peoples will remain as sales representative
(A1), 10 peoples will be promoted to sales manager (A2), 20 peoples will be
transferred as customer service representative (B1), and 10 people will be
removed from the organisation.

(B) PEDICTING SUPPLY

cont. YEAR 2022 (EXPECTED)
CATEGORIES CURRENT A1 A2 B1 B2 OUT
& JOB WORKFORCE
LEVELS
YEAR A1 100 60 10 20 0 10
2021 A2 20 1 12 0 0 7
B1 200 10 0 120 10 60
B2 15 0 0 0 12 3
PREDICTED SUPPLY 71 22 140 22 80
b. Sales Manager (A2)
i. In Part B (predicting supply), in the year 2021, the total number of sales
manager (A2) is 20.
ii. It is expected that in 2022, 1 people will be demoted to sales representative
(A1), 12 peoples will remain as sales manager (A2), and 7 peoples will be
removed from the organisation.

c. Customer Service Representative (B1)

i. In Part B (predicting supply), in the year 2021, the total number of customer
service representative (B1) is 200.
ii. It is expected that in 2022, 10 people will be transferred as sales
representative (A1), 120 peoples will remain as customer service
representative (B1), 10 people will be promoted as Customer Service
Manager (B2) and 60 peoples will be removed from the organisation.

d. Customer Service Manager (B2)

i. In Part B (predicting supply), in the year 2021, the total number of customer
service representative (B2) is 15.
ii. It is expected that in 2022, 12 peoples will remain as customer service
manager (B2), and 3 peoples will be removed from the organisation.
2. Calculated and interpret the predicted supply of year 2022

(B) PEDICTING SUPPLY

YEAR 2022 (EXPECTED)
CATEGORIES CURRENT A1 A2 B1 B2 OUT
& JOB WORKFORCE
LEVELS
YEAR A1 100 60 10 20 0 10
2022 A2 20 1 12 0 0 7
B1 200 10 0 120 10 60
B2 15 0 0 0 12 3
PREDICTED SUPPLY 71 22 140 22 80

• In the year 2022, the organisation is expected to supply 71 sales representatives (A1), 22
sales managers (A2), 140 customer service representatives (B1) and 22 customer service
managers (B2).