Department of Mathematics

Pratt and Whitney AutoAir

Projecting Labor Contract Costs *

Companies that employ large numbers of workers with varying wages and skill levels must perform particularly complicated calculations in order to project future wage increases. Pratt & Whitney Auto-Air Inc. certainly exemplifies the type of corporation that would benefit greatly from an automated tool designed to forecast employee wage increases. More specifically, such a program would facilitate the company's negotiations with the workers' Union, helping to create economic figures acceptable to both the corporation's management and the Union.

The complexity of the wage computations can be attributed both to the number of variables involved in the calculation process and the diversity of wage classifications. There are three main factors affecting wages, namely, cost of living allowance, progression rates of pay and wage increases guaranteed by contract terms, as outlined in the Union workers' agreement

The purpose of this project is to implement Microsoft Excel in developing a program that can accurately forecast future wages for each individual presently employed by Pratt & Whitney Auto-Air, Inc. This model could serve two different yet equally important purposes for Pratt & Whitney Auto-Air, Inc. First, this program could replace the company's current system of calculating weekly payrolls, a task undertaken by two company accountants. This would relieve the accountants of this time consuming task, allowing them to concentrate on economic issues more important to the corporation. More importantly, though, the model could prove to be a vital tool to the company during its contract negotiations with the labor Union. By allowing management to consider different combinations of salary increases for the many job categories, using the three wage increases as inputs, the program would enable management to determine an optimal set of wage increases that seems most beneficial to the company's finances. The program also will calculate the percent increase of employee salaries.

* Summary prepared by Ferit Kivanc. George H. Schriver, Pratt and Whitney Autoair, is the liaison. M. J. Winter will be the manager.


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