Answered: For the production of part R-193, two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For the production of part R-193, two operations are being considered. The capital investment associated with each operation is identical. Operation 1 produces 2,000 parts per hour. After each hour, the tooling must be adjusted by the machine operator. This adjustment takes 20 minutes. The machine operator for Operation 1 is paid $20 per hour (this includes fringe beneﬁts). Operation 2 produces 1,750 parts per hour, but the tooling needs to be adjusted by the operator only once every two hours. This adjustment takes 30 minutes. The machine operator for Operation 2 is paid $11 per hour (this includes fringe beneﬁts). Assume an 8-hour workday. Further assume that all parts produced can be sold for $0.40 each. Should Operation 1 or Operation 2 be recommended?

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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