Question

Imagine you have some workers and some handheld computers that you can use to take inventory at a warehouse. There are diminishing returns to taking inventory. If one worker uses one computer, he can inventory 125 items per hour. Two workers sharing a computer can together inventory 175 items per hour. Three workers sharing a computer can together inventory 185 items per hour. And four or more workers sharing a computer can together inventory fewer than 185 items per hour. Computers cost $125 each and you must pay each worker $30 per hour. Instructions: Round your answers to 2 decimal places. a. If you assign one worker per computer, what is the cost of inventorying a single item? $ . b. What if you assign two workers per computer? What is the cost of inventorying a single item? $ . c. What if you assign three workers per computer? $ . d. How many workers per computer should you assign if you wish to minimize the cost of inventorying a single item? Instructions: Enter your answer as a whole number. worker(s) per computer.

Answer 1

Answer : Table showing information about workers hired and cost of producing one unit of an inventory in one hour

Number of workers hired in one computer in one hour	No of units produced	Cost of one computer ( Fixed Cost )	Cost of workers hired (Variable cost)$30 per worker in an hour	Total Cost	Cost of producing one unit
1	125	$125	$30	$155	$155/125 = $1.24
2	175	$125	$30*2 = $60	$185	$185/175 =$1.06
3	185	$125	$30*3 =$90	$215	$215/185=$1.16
4	Less than 185	$125	$30*4 = $120	$245	Cost is more than $1.16

(a) Cost of inventory from a single item with single worker = Total Cost / Number of units produced ( Check from table)

Total cost = Fixed cost + Variable cost =$155

Number of units produced = 125

Cost of inventory of single item = $155/125 =$1.24

Answer :

(b) Cost of inventory from a single item with two worker = Total Cost / Number of units produced ( Check from table)

Total cost = Fixed cost + Variable cost =$185

Number of units produced = 175

Cost of inventory of single unit with two workers = $185/175 = $1.06

(c) Cost of inventory from a single item with three worker = Total Cost / Number of units produced ( Check from table)

Total Cost = Fixed cost + Variable cost = $215

Number of units produced = 185

Cost of inventory from a single item with three workers = $215/185 = $1.16

(d) Two workers per computer should be hired so that cost of inventory of producing single machine has been used. The main emphasis is to minimises the cost so they hired two worker in order to minimisev there cost such as $1.06.