Question

Alternative P, $ S, $ Life, years M&O, S/year 3,500 1,500 Labor rate $/hr 24 People Output, tons/hr 8 4,000 0 10 5 12 Select the best alternative if the expected production tonnage is 2500 ton

Answer 1

In the given question, we have two alternatives one is A and another one is M.

we need to find the best alternative which is producing effectively 2500 tons.

In A, the output tons per hour is 8 compared with M is 6.

So, the total tons of 2500 is producing A will produce in how many hours?

=2500/8

=312.50 hours approximately

Let’s check the M to produce in how many hours?

=2500/6

=417 hours approximately

However, up to here, we may come to the certain part of conclusion as in output wise A is best rather than M alternative in producing 2500 tons on less time of 312.50 hours approximately.

In people A have 1 and M have 3. A unit the people had 1 even though they are producing more output in less time. So, the A unit is best compared to M.

In coming to labor per hour – The A unit paying $24 per hour and M unit pays $12 per h hour. We saw the number of people in A had 1 and M had 3 persons.

In A: Labor rate multiply with people so it is 1 X $24 so it is total $24.

In M: Labor rate multiply with people so it is 3 X $12 so it is total $36.

After the things observed the above labor rate, the A unit is best comparing with M. In the way of producing effective output with less number of people. So, the cost of production standards will not make the price high.

So, overall the alternatives observed of A and M, the best alternative is A compared to M.