A Retailer Experiences a Seasonal Demand Pattern for Its Services

question 12

Essay

A retailer experiences a seasonal demand pattern for its services. Labor requirements over a typical six- month period follow. $$\begin{array} { | l | l | l | l | c | c | c | } \hline \text { Period } & 1 & 2 & 3 & 4 & 5 & 6 \\\hline \text { Requirement } & 7 & 8 & 9 & 11 & 12 & 7 \\\hline\end{array}$$ Costs associated with operations are as follows:
Wages = $2,000 per worker per month
Hiring cost = $1,000 per worker
Layoff cost = $1,500 per worker
The current workforce level is 10 workers. Use the spreadsheet approach and the above data to answer the following questions:
a. The total cost of the staffing plan (including the cost of regular wages, hiring, and layoffs) using a chase strategy with hiring and layoffs, but no overtime, is
b. The total cost of the staffing plan, using a level strategy where no overtime is allowed, and the undertime paid for, is
c. Suppose that overtime is allowed up to 25 percent of the regular- time capacity, and that overtime wages are 150 percent of the regular- time rate. The total cost of the level strategy with overtime and undertime, which also minimizes undertime, is

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Definitions:

Scarcity

A basic economic challenge where human desires appear endless but the resources available are finite.

Positive Statements

Assertions about the world that are factual and can be tested for accuracy.

Normative Statements

Assertions about how the world ought to be, reflecting opinions and subjective values rather than empirical facts.

Normative Statement

An assertion that expresses a value judgment or opinion, discussing what ought to be rather than what is.