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:

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.

After-Tax Net Income

The amount of profit left after all taxes have been deducted from total revenue.

Payback Period

The length of time it takes for an investment to recover its initial cost, used in capital budgeting to assess investment viability.

After-Tax Net Income

The amount of profit a company has left after paying all its taxes.