A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $32 per hour each, can individually assemble the test equipment in 2.7 hours per unit. Alternatively, teams of five less-skilled workers (at $22 per hour each) can assemble a unit in 0.8 hours. Which approach is more economical?

A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $32 per hour each, can individually assemble the test equipment in 2.7 hours per unit. Alternatively, teams of five less-skilled workers (at $22 per hour each) can assemble a unit in 0.8 hours. Which approach is more economical?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2.2CE

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