Table 10.3 A Large Distribution Center Uses Some Part-Time Employees in Its

question 35

Multiple Choice

Table 10.3
A large distribution center uses some part-time employees in its workforce. Each part-time employee works a maximum of 80 hours per month. The workforce requirements (expressed as the number of part-time employees working the maximum regular time of 80 hours per month) are given in the following table for the next six periods.

The relevant costs are:
Wages = $350/month/worker
Hiring cost = $100/worker
Layoff cost = $50/worker
Overtime cost = 150% of regular-time rate
The current workforce level is 60, and overtime cannot exceed 25% of regular-time capacity.
Use the spreadsheet approach to answer the following questions.
-Use the information in Table 10.3. Use a level strategy with overtime and undertime. Minimize undertime by maximizing overtime during the peak period. If the firm does not pay undertime, what is the total cost of the staffing plan including the cost of regular wages, hiring, and layoffs?

• A) less than or equal to $158,000
• B) greater than $158,000 but less than or equal to $160,000
• C) greater than $160,000 but less than or equal to $162,000
• D) greater than $162,000

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Definitions:

Diminishing Marginal Utility

A principle stating that as a person consumes more of a good, the additional satisfaction or utility from consuming an additional unit decreases.

Total Utility

The total satisfaction received from consuming a particular quantity of goods or services.

Marginal Utility

The added satisfaction a consumer gets from having one more unit of a good or service.

Diminishing Marginal Utility

A principle in economics that posits an individual gains less satisfaction from consuming each additional unit of the same product or service.