A manager faces peak (weekly) demand for one of her op-erations, but is not sure how long the peak will last. She caneither use overtime from the current workforce, or hire/lay off and just pay regular-time wages. Regular-time pay is$500 per week, overtime is $750 per week, the hiring cost is$2,000, and the layoff cost is $3,000. Assuming that peopleare available seeking such a short-term arrangement, howmany weeks must the surge in demand last to justify a tem-porary hire? Hint: Use break-even analysis (see SupplementA, “Decision Making”). Let w be the number of weeks ofthe high demand (rather than using Q for the break-evenquantity). What is the fixed cost for the regular-time option?Overtime option?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
A manager faces peak (weekly) demand for one of her op-
erations, but is not sure how long the peak will last. She can
either use overtime from the current workforce, or hire/
lay off and just pay regular-time wages. Regular-time pay is
$500 per week, overtime is $750 per week, the hiring cost is
$2,000, and the layoff cost is $3,000. Assuming that people
are available seeking such a short-term arrangement, how
many weeks must the surge in demand last to justify a tem-
porary hire? Hint: Use break-even analysis (see Supplement
A, “Decision Making”). Let w be the number of weeks of
the high demand (rather than using Q for the break-even
quantity). What is the fixed cost for the regular-time option?
Overtime option?
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