A Paint Company Has the Following Aggregate Demand Requirements and Cost

question 4

Multiple Choice

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND } \\\text { (UNITS) }\end{array} \\\hline 1 & 1,200 \\\hline 2 & 1,500 \\\hline 3 & 1,900 \\\hline 4 & 1,000 \\\hline \text { TOTAL: } & 5,600 \\\hline\end{array}$$ $\begin{array}{ll}\text { Previous quarter's production: } & 900 \text { units } \\\hline \text { Beginning inventory: } & 0 \\\hline \text { Backorder costs: } & \$ 60 / \text { unit } \\\hline\text { Inventory-holding cost }\\\text { (on ending inventory) : } & \$ 12 / \text { unit/quarter } \\\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \\\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \\\hline\text { Unit cost: } & \$ 45 / \text { unit } \\\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\\\end{array}$ ____________________________________________________________________
-Using the information in Table 2, determine the change in workforce costs (hiring and firing employees) if the paint company decides to use a chase strategy.

• A) $93,000
• B) $84,000
• C) $280,000
• D) $30,000

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Definitions:

Regression Parameters

The coefficients in a regression equation that represent the relationship between independent variables and a dependent variable.

Standard Error Of Estimate

A measure used in statistics to indicate the accuracy of a prediction or how much sample data deviates from the actual population.

T-Test

A type of statistical test that is used to compare the means of two groups to determine if the differences between them are statistically significant.

Coefficient Of Correlation

A statistical measure that calculates the strength and direction of a linear relationship between two variables; its value ranges from -1 to 1.