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:

Negotiable

Refers to a written and signed promise or order to pay a specific sum of money that can be transferred from one holder to another with the ownership of the document constituting ownership of the value.

Nonnegotiable

Refers to an item or term that cannot be altered or transferred in agreement or transaction.

Express Promise

A clear and specific commitment stated by one party to another, often forming the basis of an express contract.

Consideration

In contract law, something of value promised, given, or received that motivates parties to enter into an agreement.