Wages plus lost scooter revenue

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Reference no: EM131115499

EZSkut rents out power scooters at a large shopping complex. They currently employ one repair person who performs emergency repairs for their fleet of 100+ scooters (assume that the repair person works and is paid for a full work shift even if there are no scooters needing repair, since they can perform other tasks while waiting). On average, 0.8125 scooters per hour arrive in the shop requiring emergency repair. It takes the repair person an average of 0.6 hours to perform emergency repair on a scooter (assume negative exponential distribution). Assume that the time spent for a scooter being repaired or waiting for repair costs $20 per hour in lost revenue (since the scooters can’t be rented out during the time that they are being repaired). What would be the difference in total hourly cost (wages plus lost scooter revenue) if a second repair person were hired at $10/hour? (Assume that the two repair persons would work independently, both would repair scooters in the same average time as the one repair person, and the scooters needing repair would wait for the first of the two to become available, if they are both busy.)

a. increase by an amount between $0 and $1 per hour

b. increase by an amount between $1 and $2 per hour

c. increase by an amount between $2 and $3 per hour

d. decrease by an amount between $0 and $1 per hour

e. decrease by an amount between $1 and $2 per hour

Reference no: EM131115499

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