Suppose That the Shadow Price for Assembly Time Is $5/hour

question 79

Multiple Choice

Suppose that the shadow price for assembly time is $5/hour. The allowable increase for the assembly time constraint is 40 hours, and the allowable decrease is 30 hours. If all assembly hours were used under the initial LP solution and workers normally make $4/hour but can work overtime for $6/hour, what should management do?

• A) do not change available hours for assembly time
• B) decrease available hours for assembly time by 30 hours
• C) increase available hours for assembly time by 40 hours
• D) decrease available hours for assembly time by 5 hours
• E) increase available hours for assembly time by 5 hours

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Definitions:

Borrowing Rate

The interest rate that a financial institution charges a borrower for the use of money.

Principal

The original sum of money borrowed in a loan, or the amount of the loan that has yet to be repaid, excluding interest.

Annual Payments

Regular payments made yearly, often referring to the interest or dividends paid by bonds or stocks.

Compounded Annually

This term refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods, with the compounding occurring once per year.