Table 15.2
Archie Toys is a retailer operating out of Wichita,Kansas.It experiences a seasonal demand pattern for its services.Labor requirements over a typical six-month period follow.The workforce requirements (expressed as number of employees)are given in the following table for the next six periods. Costs associated with operations are as follows:
Wages = $800 per worker per month
Hiring cost = $300 per worker
Layoff cost = $200 per worker
The current workforce level is nine workers,and the undertime is paid for.Use the spreadsheet approach and the preceding data to answer the following questions.
-Use the information in Table 15.2.Suppose that overtime is allowed up to 25% of the regular-time capacity,and that overtime wages are 150% of the regular-time rate.The total cost of the level strategy with overtime and undertime,which also minimizes undertime,is:
A)less than or equal to $60,000.
B)greater than $60,000 but less than or equal to $65,000.
C)greater than $65,000 but less than or equal to $70,000.
D)greater than $70,000.

Question

Table 15.2
Archie Toys is a retailer operating out of Wichita,Kansas.It experiences a seasonal demand pattern for its services.Labor requirements over a typical six-month period follow.The workforce requirements (expressed as number of employees)are given in the following table for the next six periods.  Costs associated with operations are as follows:
Wages = $800 per worker per month
Hiring cost = $300 per worker
Layoff cost = $200 per worker
The current workforce level is nine workers,and the undertime is paid for.Use the spreadsheet approach and the preceding data to answer the following questions.
-Use the information in Table 15.2.Suppose that overtime is allowed up to 25% of the regular-time capacity,and that overtime wages are 150% of the regular-time rate.The total cost of the level strategy with overtime and undertime,which also minimizes undertime,is:
A)less than or equal to $60,000. 
B)greater than $60,000 but less than or equal to $65,000. 
C)greater than $65,000 but less than or equal to $70,000. 
D)greater than $70,000.

Quizplus · Accepted Answer

The total cost of the level strategy with overtime and undertime, which also minimizes undertime, is less than or equal to $60,000. This is because the cost of overtime is 150% of the regular-time rate, and the cost of undertime is 100% of the regular-time rate. Therefore, the total cost of the level strategy with overtime and undertime is less than or equal to the cost of the level strategy with regular-time only.

Table 15.2 Archie Toys Is a Retailer Operating Out of Wichita,Kansas.It Experiences