Optimal Input Level

question 49

Essay

Optimal Input Level. Smokey's Garage, Inc., provides routine auto diagnostics for customers in the Atlanta, Georgia, metropolitan area. Tests are supervised by skilled mechanics using equipment produced by two leading competitors in the auto test equipment industry. Records for the current year show an average of 4 tests per hour performed on the Sunny Tune System (STS), and 6 tests per hour on a new machine, the Car Care Tower (CCT). The STS is leased for $8,000 per month, and the CCT is leased at a rate of $12,000 per month. On average, each machine is operated 25 eight-hour days per month. Labor and all other costs are fixed.
A. Does company usage reflect an optimal mix of testing equipment?
B. At a price of $15 per test should the company lease more machines?

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Definitions:

Existential Anguish

The deep and often distressing realization of one's own freedom and the inherent responsibility of making meaningful choices in an apparently indifferent or absurd world.

Nirvana

In Zen Buddhism, the serene state of selfless being that is the result of having achieved enlightenment.

Anatta

In Zen Buddhism, the fundamental idea of “nonself”—that the single, isolated self is an illusion.

Humanist Psychologists

Professionals who focus on individual potential and stress the importance of growth and self-actualization.