The Following Information Relates to a Company's Aggregate Production Planning

question 14

Multiple Choice

The following information relates to a company's aggregate production planning activities:

Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a chase demand strategy is used the number of workers fired in quarter 3 is

• A)0
• B)40
• C)50
• D)75

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Definitions:

Classical Theory

An economic theory that emphasizes the importance of free markets, competition, and the belief that markets, through the forces of supply and demand, will naturally regulate the economy.

Employment

The condition of having a paid job; the total number of people currently employed in the economy.

Interest Rate Effect

The impact that changes in the interest rate have on consumer spending and investment due to the cost of borrowing money.

Real Wealth Effect

The change in consumption levels caused by a change in purchasing power, often due to inflation or deflation.