Requirements (labor hours) 720 960 1,200 1,440 Probability 0.2 0.4 0.3 0.1 Number of Crews 4 5 3.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Sanchez Trucking has been experiencing delays at its ware-
house operations. Management hired a consultant to find
out why service deliveries to local businesses have taken
longer than they should. The consultant narrowed down the
problem to the number of work crews loading and unload-
ing trucks. Each crew consists of six employees who work
as a team on a variety of tasks; each employee works a full
40 hours a week. However, costs are also a concern. The
consultant advised management that they could supplement
work crews with short-term employees, at a higher cost, to
cover unexpected needs on a weekly basis. Each work crew
permanently hired by Sanchez costs $3,200 per week in
wages and benefits, while a crew of short-term employees
costs $5,000 per week. Complicating the decision is the fact
that the weekly hourly requirements for work crews is uncer-
tain because of the volatility in the number of deliveries to be
made. Deliberating with management, the consultant arrived
at the following data:

Requirements (labor hours)
720
960
1,200 1,440
Probability
0.2
0.4
0.3
0.1
Number of Crews
4
5
3.
Transcribed Image Text:Requirements (labor hours) 720 960 1,200 1,440 Probability 0.2 0.4 0.3 0.1 Number of Crews 4 5 3.
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