The New Owner of a Beauty Shop Is Trying to Decide

question 22

Multiple Choice

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high. $$\begin{array} { | l | l | l | l | } \hline { \begin{array} { l } \text { NUMBER } \\\text { OF } \\\text { BEAUTICIANS }\end{array} } & { \text { DEMAND } } \\\hline & \text { LOW } & \text { MEDIUM } & \text { HIGH } \\\hline \text { One } & 50 & 75 & 100 \\\hline \text { Two } & 0 & 100 & 100 \\\hline \text { Three } & - 100 & 70 & 300 \\\hline\end{array}$$ If she uses the minimax regret criterion, how many beauticians will she decide to hire?

• A) one
• B) two
• C) three
• D) either one or two
• E) either two or three

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Definitions:

Processing Department

A division within a manufacturing facility where a specific stage of production is carried out.

Cost Per Equivalent Unit

A calculation used in process costing to allocate costs among units of production, considering units partially completed at the end of a period.

Equivalent Units

A concept used in process costing that converts partially completed units into a smaller number of fully completed units based on the percentage of completion.

Conversion Costs

Expenses for labor and overhead required to transform raw materials into finished products.