Trosper Tire Company has decided to hire a new mechanic to handle all tire changes for customers ordering a new set of tires. Tw
o mechanics are available for the job. One mechanic has limited experience and can be hired for $7 per hour. It is expected that this mechanic can service an average of three customers per hour. A mechanic with several years of experience is also being considered for the job. This mechanic can service an average of four customers per hour, but must be paid $10 per hour. Assume that customers arrive at the Trosper garage at the rate of two per hour. a) Compute waiting-line operating characteristics for each mechanic b) If the company assigns a customer waiting cost of $15 per hour, which mechanic provides the lower operating cost? Note: this is the cost of customer waiting in the system.
1 answer:
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Answer: The $4.05 market price
Explanation: Air-tite can buy or sell Hydrol at $4.05. If they decide to accept the order, there has to be a higher return on the use of Hydrol in the return than they would get from selling Hydrol as is.
There may also be an opportunity cost to using the product for this special order if there is an order that would yield higher returns for the use of Hydrol.
The quantity that would remain after making the special order does not have any impact on the decision making process, as they are considering just one order that requires Hydrol.
The purchase price is not relevant as they cannot purchase Hydrol at that price in the present. The total quantity is not relevant either as they have enough for the order.
