A manager faces peak (weekly) demand for one of her op-erations, but is not sure how long the peak will last. She caneither use overtime from the current workforce, or hire/lay off and just pay regular-time wages. Regular-time pay is$550 per week, overtime is $825 per week, the hiring cost is$2,000, and the layoff cost is $3,000. Assuming that peopleare available seeking such a short-term arrangement, howmany weeks must the surge in demand last to justify atemporary hire? Hint: Use break-even analysis (see Supple-ment A, “Decision Making Models”). Let w be the numberof weeks of the high demand (rather than using Q for thebreak-even quantity). What is the fixed cost for the regular-time option? Overtime option?

A manager faces peak (weekly) demand for one of her op-erations, but is not sure how long the peak will last. She caneither use overtime from the current workforce, or hire/lay off and just pay regular-time wages. Regular-time pay is$550 per week, overtime is $825 per week, the hiring cost is$2,000, and the layoff cost is $3,000. Assuming that peopleare available seeking such a short-term arrangement, howmany weeks must the surge in demand last to justify atemporary hire? Hint: Use break-even analysis (see Supple-ment A, “Decision Making Models”). Let w be the numberof weeks of the high demand (rather than using Q for thebreak-even quantity). What is the fixed cost for the regular-time option? Overtime option?

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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A manager faces peak (weekly) demand for one of her op-erations, but is not sure how long the peak will last. She caneither use overtime from the current workforce, or hire/lay off and just pay regular-time wages. Regular-time pay is$500 per week, overtime is $750 per week, the hiring cost is$2,000, and the layoff cost is $3,000. Assuming that peopleare available seeking such a short-term arrangement, howmany weeks must the surge in demand last to justify a tem-porary hire? Hint: Use break-even analysis (see SupplementA, “Decision Making”). Let w be the number of weeks ofthe high demand (rather than using Q for the break-evenquantity). What is the fixed cost for the regular-time option?Overtime option?
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