2

. _____________________________________________________________________________________________________________________________________________| 2. How would your answer change to 1 if you hire another manger and lease another manager With demand of 800 Calculate possible constraints W/ additional manager 1,250 packages W/ additional machine 1,200 packages Broken glass 1,860 packages Residue 1,440 packages Demand 800 no constraint, 800 can be met Option 1: Calculate total profit and compare to SQ Revenue 214,000 FC (136,000) 78,000 Status quo 92,500 S (14,500) worse off, don't do it Option 2: Calculate incremental total profit Revenue 53,500 FC S (68,000) Incremental (14,500) wose off, don't do it With demand of 850 Revenue 227,375 FC (136,000) 91,375 Status quo 92,500 S (1,125) worse off, don't do it 3. Based on your answer to 2, would you be willing to negotiate with your process 2 manager who is currently paid $46,000/year? What might you negotiate? Max willingness to pay = max benefit of additional packages Incremental packages (assume demand of 800) 200 CM/package 268 Incremental revenue 53,500 Less machine cost $ (22,000) Max willingness to pay 31,500 Hours needed 800 Hourly rate willing to pay 39.38 Current wage 18.4 Can you hire contract or part time? Only need 800 hours, and willing to pay up to $39/hr