You have two workers at a distribution center. A senior picker and a first-year picker. The

senior-level picker works 8-hour shifts 5 days a week with one 30-minute lunch break and a

mid-afternoon break for 15 minutes (paid). The senior picker gets all weekends off and 8 paid

holidays a year. Additionally, he/she gets three full weeks of vacation a year. He/she gets paid

$19.50/hr. and his/her benefits are 38% of her hourly wage.

The entry-level (1st year) picker works 10-hour shifts, 4 days a week with one 30-minute lunch

break (paid). The entry picker gets weekends off and 8 paid holidays a year. Additionally, he/she

gets one week of vacation a year. Their hourly wage is 15.20/hr. with fringe benefits at 25.6% of

the hourly wage.

Note: assume there are 365 days in the year and 104 weekend days

A. What is the effective cost per work hour for both workers assuming 100% productivity.

B. The entry-level worker is suffering from a learning curve, dropping his/her productivity to

only 80%. What is his/her new effective cost per work hour for the 1st year person?

C. Does a change in the hourly rate, or a change in worker productivity have a larger effect on

the effective cost per work hour? Why?

D. Management is happy with the performance of the entry-level worker after some time

(assuming the only thing that has changed is his/her productivity which improved to 85%) and

he/she is to be promoted. What is the most he/she can get paid per hour and have an effective

cost per work hour at $26?