Schneider Logistics Company has built a new warehouse in Columbus, Ohio, to facilitate the consolidation of freight shipments to customers in the region. George Schneider must determine how many teams of dock workers he should hire to handle the cross-docking operations and the other warehouse activities. Each team costs $5,000 a week in wages and overhead. Extra capacity can be subcontracted at a cost of $8,000 a team per week. Each team, whether in-house or subcontracted, can satisfy 200 labor hours of work a week. The labor hour requirements for the new facility are uncertain. Management has estimated the following probabilities for the requirements: Requirements (hours/wk) 200 400 600 Number of teams 1 2 3 Probability 0.20 0.50 0.30 How many teams should Schneider hire?
Schneider Logistics Company has built a new warehouse in Columbus, Ohio, to facilitate the consolidation of freight shipments to customers in the region. George Schneider must determine how many teams of dock workers he should hire to handle the cross-docking operations and the other warehouse activities. Each team costs $5,000 a week in wages and overhead. Extra capacity can be subcontracted at a cost of $8,000 a team per week. Each team, whether in-house or subcontracted, can satisfy 200 labor hours of work a week. The labor hour requirements for the new facility are uncertain. Management has estimated the following probabilities for the requirements: Requirements (hours/wk) 200 400 600 Number of teams 1 2 3 Probability 0.20 0.50 0.30 How many teams should Schneider hire?
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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Schneider Logistics Company has built a new warehouse in Columbus, Ohio, to facilitate the consolidation of freight shipments to customers in the region. George Schneider must determine how many teams of dock workers he should hire to handle the cross-docking operations and the other warehouse activities. Each team costs $5,000 a week in wages and overhead. Extra capacity can be subcontracted at a cost of $8,000 a team per week. Each team, whether in-house or subcontracted, can satisfy 200 labor hours of work a week. The labor hour requirements for the new facility are uncertain. Management has estimated the following probabilities for the requirements:
| Requirements (hours/wk) | 200 | 400 | 600 |
| Number of teams | 1 | 2 | 3 |
| Probability | 0.20 | 0.50 | 0.30 |
How many teams should Schneider hire?
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