Answer:
a. The cost of inventorying a single item is $1.00 per item.
b. The cost of inventorying a single item is $0.86 per item.
c. The cost of inventorying a single item is $0.95 per item.
d. The cost of inventorying a single item is $1.08 per item.
e. You should assign two workers per computer in order to minimize the cost of inventory per single item.
Explanation:
Note: This question is not complete. A complete question is therefore provided before answering the question as follows:
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 $100 each and you must pay each worker $25 per hour.
a. If you assign one worker per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $ _____ per item
b. If you assign two workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $ _____ per item
c. If you assign three workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item
d. If you assign four workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item.
e. How many workers per computer should you assign if you wish to minimize the cost of inventory per single item? _____ worker(s) per computer
The explanation to the answer is now provided as follows:
Note: See the attached excel file for all the calculations.
a. If you assign one worker per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $ _____ per item
The cost of inventorying a single item is <u>$1.00 per item.</u>
b. If you assign two workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $ _____ per item
The cost of inventorying a single item is <u>$0.86 per item.</u>
c. If you assign three workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item
The cost of inventorying a single item is <u>$0.95 per item.</u>
d. If you assign four workers per computer, what is the cost of inventorying a single item? Instructions: Round your answer to two decimal places. $_____ per item.
The cost of inventorying a single item is <u>$1.08 per item.</u>
e. How many workers per computer should you assign if you wish to minimize the cost of inventory per single item? _____ worker(s) per computer
To minimize the cost of inventory per single item, you should assign the number of workers at a point where the cost inventorying a single item is the lowest.
From from parts a to d above, the <u>lowest cost of $0.86 per item </u>of inventorying a single item is obtained in part b when you assign two workers per computer.
Therefore, you should assign two workers per computer in order to minimize the cost of inventory per single item.
