The Soft Resource Allocation Problem

In this paper, we propose a hierarchical framework for organizing and staffing a product development process at a leading software company that produces tax software. Every year, starting in August, the firm struggles with a high workload imposed by thousands of changes in tax rules announced by the IRS. These changes have to be processed and incorporated into the next generation of the product by mid-December. Wide variations in the types of tax forms and their processing requirements together with feedback loops within the development process makes project management extremely difficult. In this competitive market, any delay in the release of the product leads to significant losses. We develop models for organizing and staffing the development activities to meet the deadline at the lowest cost. First, U.S. states are partitioned into groups based on a grouping index. Second, an optimization problem is solved to determine the staffing levels for each group. To provide the firm with a range of resource configurations, we use two approaches: a conservative pull approach that treats the process line similarly to an assembly line, and a liberal push approach that focuses on the total workload at each stage