Capacity expansion for an IT service firm under exponential demand growth with skilled workforce

This paper examines an IT service firm that owns capacity and wishes to meet an identified exponential demand growth over finite horizon. As IT service industry is one of the professional service industries, the capacity of the firm dependents on not only the quantity and technology level of equipments but also the quantity and skills of human resources. The typical capacity expansion literature has focused on the expansion of equipment capacity, but ignoring the workforce aspect. On the other hand, the manpower literature has only focused on staffing decision. We attempts to unify the two streams of research by developing a general model that considers expansion of equipments as well as hiring and training decision, together with lead times and economics of scale. As the complexity of the model, a genetic algorithm (GA) is applied to solve the problem.