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Hw 3 # 3

# Hw 3 # 3 - With an output of 150 and each worker producing...

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a) Period Q(d) # of workers needed # hired # laid off adjustment cost= hiring Q1 2007 100 10 0 8 4000 Q2 2007 120 12 2 0 1200 Q3 2007 160 16 4 0 2400 Q4 2007 190 19 3 0 1800 Q1 2008 110 11 0 8 4000 Q2 2008 150 15 4 0 2400 Q3 2008 170 17 2 0 1200 Q4 2008 200 20 3 0 1800 total adjustment cost 18800 b) Period Q(d) Qs = mean Qd Δ I= Qs -Qd starting inv ending inv inv cost Q1 2007 100 150 50 0 50 0 Q2 2007 120 150 30 50 80 2000 Q3 2007 160 150 -10 80 70 3200 Q4 2007 190 150 -40 70 30 2800 Q1 2008 110 150 40 30 70 1200 Q2 2008 150 150 0 70 70 2800 Q3 2008 170 150 -20 70 50 2800 Q4 2008 200 150 -50 50 0 2000 mean Q = 150 inv cost = 16800

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Unformatted text preview: With an output of 150 and each worker producing 10 units, there will be 150/10 = 15 workers It is more cost effective to use the inventory system. The adjustment costs for hiring/laying off is 18,800 while the cost of using the inventory system is 16800. The inventory system present of (18,800-16,800)= \$2,000 savings. g: \$600, Laying off: \$500 f employees ts a savings...
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