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Sanchez Trucking has been experiencing delays at its warehouse operations. Management hired a consultant to find out why service deliveries to local businesses have taken longer than they should. The consultant narrowed down the problem to the number of work crews loading and unloading trucks. Each crew consists of 7 employees who work as a team on a variety of tasks; each employee works a full 40 hours a week. However, costs are also a concern. The consultant advised management that they could supplement work crews with short-term employees, at a higher cost, to cover unexpected needs on a weekly basis. Each work crew permanently hired by Sanchez costs $3,500 per week in wages and benefits, while a crew of short-term employees costs $6,000 per week. Complicating the decision is the fact that the weekly hourly requirements for work crews is uncertain because of the volatility in the number of deliveries to be made. Deliberating with management, the consultant arrived at the following data. Requirements (man-hours) Probability Number of crews 560 0.1 2 840 0.3 3 1,120 0.3 4 D work crews is the lowest cost alternative, with expected weekly costs to Sanchez of $ 1,400 0.3 5 If the consultant wants to offer a solution that minimizes the expected weekly costs for Sanchez, how many work crews should Sanchez have on its permanent payroll? A payroll containing (Enter your responses as integers.)

Sanchez Trucking has been experiencing delays at its warehouse operations. Management hired a consultant to find out why service deliveries to local businesses have taken longer than they should. The consultant narrowed down the problem to the number of work crews loading and unloading trucks. Each crew consists of 7 employees who work as a team on a variety of tasks; each employee works a full 40 hours a week. However, costs are also a concern. The consultant advised management that they could supplement work crews with short-term employees, at a higher cost, to cover unexpected needs on a weekly basis. Each work crew permanently hired by Sanchez costs $3,500 per week in wages and benefits, while a crew of short-term employees costs $6,000 per week. Complicating the decision is the fact that the weekly hourly requirements for work crews is uncertain because of the volatility in the number of deliveries to be made. Deliberating with management, the consultant arrived at the following data. Requirements (man-hours) Probability Number of crews 560 0.1 2 840 0.3 3 1,120 0.3 4 D work crews is the lowest cost alternative, with expected weekly costs to Sanchez of $ 1,400 0.3 5 If the consultant wants to offer a solution that minimizes the expected weekly costs for Sanchez, how many work crews should Sanchez have on its permanent payroll? A payroll containing (Enter your responses as integers.)

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter15: Lean Accounting And Productivity Measurement
Section: Chapter Questions
Problem 7E: Bienestar, Inc., implemented cellular manufacturing as recommended by a consultant. The production...
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Sanchez Trucking has been experiencing delays at its warehouse operations. Management hired a consultant to find out why service deliveries to local businesses have taken longer than they should. The consultant narrowed down the problem to the number of work crews loading and unloading trucks. Each crew consists of 7 employees who work as a team on a variety of tasks; each employee works a full 40 hours a week. However, costs are also a concern. The consultant advised management that they could supplement work crews with short-term employees, at a higher cost, to cover unexpected needs on a weekly basis. Each work crew permanently hired by Sanchez costs $3,500 per week in wages and benefits, while a crew of short-term employees costs $6,000 per week. Complicating the decision is the fact that the weekly hourly requirements for work crews is uncertain because of the volatility in the number of deliveries to be made. Deliberating with management, the consultant arrived at the following data. Requirements (man-hours) Probability Number of crews 560 0.1 2 840 0.3 3 1,120 0.3 4 1,400 0.3 5 If the consultant wants to offer a solution that minimizes the expected weekly costs for Sanchez, how many work crews should Sanchez have on its permanent payroll? A payroll containing work crews is the lowest cost alternative, with expected weekly costs to Sanchez of $ (Enter your responses as integers.)
Transcribed Image Text:Sanchez Trucking has been experiencing delays at its warehouse operations. Management hired a consultant to find out why service deliveries to local businesses have taken longer than they should. The consultant narrowed down the problem to the number of work crews loading and unloading trucks. Each crew consists of 7 employees who work as a team on a variety of tasks; each employee works a full 40 hours a week. However, costs are also a concern. The consultant advised management that they could supplement work crews with short-term employees, at a higher cost, to cover unexpected needs on a weekly basis. Each work crew permanently hired by Sanchez costs $3,500 per week in wages and benefits, while a crew of short-term employees costs $6,000 per week. Complicating the decision is the fact that the weekly hourly requirements for work crews is uncertain because of the volatility in the number of deliveries to be made. Deliberating with management, the consultant arrived at the following data. Requirements (man-hours) Probability Number of crews 560 0.1 2 840 0.3 3 1,120 0.3 4 1,400 0.3 5 If the consultant wants to offer a solution that minimizes the expected weekly costs for Sanchez, how many work crews should Sanchez have on its permanent payroll? A payroll containing work crews is the lowest cost alternative, with expected weekly costs to Sanchez of $ (Enter your responses as integers.)
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