Tiger Toys is a retailer in Omaha, Nebraska. Business is seasonal for Tiger Toys. The following table shows labor requirements over a typical six-month period (expressed as number of employees). Undertime is paid and we also know the following rates:
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Wages per month per worker:
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$800
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Hiring cost per worker
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$300
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Layoff cost per worker
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$200
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Overtime rate
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150% of the regular rate
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Overtime is allowed up to 20% of the regular time
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Month
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1
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2
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3
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4
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5
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6
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Total
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Forecasted demand
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6
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7
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12
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13
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8
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5
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Workforce level
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Undertime
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Overtime
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Productive time
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Hires
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Layoffs
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Costs
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Productive time
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Undertime
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Overtime
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Hires
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Layoffs
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The total cost of a level strategy which pays overtime and also minimizes the costs is:
A) Less than or equal to $57,000
B) More than $57,000 but less than or equal to $58,000
C) More than $58,000 but less than or equal to $59,000
D) More than $59,000