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 225 items per hour. And four or more workers sharing a computer can together inventory fewer than 235 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.

    

Answer 1

Given:

1 computer : 1 worker : inventory 125 items per hour

1 computer : 2 workers : inventory 175 items per hour

1 computer : 3 workers : inventory 225 items per hour

Cost: $125 per computer ; $30 per worker

The fixed factor of production is the computer used. 1 PC for every number of specialist to stock a specific number of items.The variable factor of creation is the quantity of workers doled out per PC.

total cost of:

1 worker : 125 items: (125+30)/125 = 1.24 per item or 1 item ( whole no.)

2 workers : 175 items :(125 + 2(30))/175 = 150/150 = 1.05 per item or 1 item

3 workers : 225 items : (125 + 3(30))/160 = 175/160 = 0.95per item or 1 item

Best to employ 3 workers per computer as total cost is minimum