Suppose that a constraint for assembly time has a shadow price of $50/hour for 15 hours in either direction and that all available assembly time is currently used (would require overtime to do more)
If the salary of workers is $30 and they receive 50% extra pay for overtime what should management do?
Reducing assembly time would save $30/hour but would cost $50/hour in lost profits.
Doing nothing would not change profits.
Increasing assembly time would cost an extra $45 per hour but increase profits by $50/hour. Thus management should be willing to pay for 15 hours of overtime and perhaps should look into increasing base assembly time capacity in the future.
You might also like to view...
Construct equivalence is comprised of conceptual equivalence, functional equivalence, and item equivalence
Indicate whether the statement is true or false
Revising the budgets to include all planning decisions will improve the quality of the budgets
Indicate whether the statement is true or false
When a company uses ________, it brings in an external company to run some of its essential operations
A) outsourcing B) insourcing C) conventional marketing D) logistics management E) a vertical marketing system
Which of the following statements applies to civil law systems?
a. They are code-based. b. They are derived from Greek law. c. High respect is paid to judicial precedents. d. Both a and b