Twentyfirst Century Electronics has discovered a theft problem at its warehouse

Question

Twentyfirst Century Electronics has discovered a theft problem at its warehouse and hasd decided to hire security guards. The firm wants to hire the optimal number of security guards. The following table shows how the number of security guards affects the number of radios stolen per week.

Number of Guards      Number of Radios Stolen per week
0                                          50
1                                          30
2                                          20
3                                          14
4                                           8
5                                            6

a) If each security guard is paid $200 a week and the cost of a stolen radio is $25, how many security guards should the firm hire?

b) If the cost of a stolen radio is $25, what is the most the firm would be willing to pay to hire the first secuirty guard?

c) If each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire?

Explanation / Answer

a.) calculate cost to cost table no. of guards 0---------0$-----------50*25 in radio == total = 1250$ 1 ---200$ ------- 30* 25 in radio === 950$ 2-----400$-----20*25 in radio ==900$ 3---600$ -_---14*25 in radio= 950$ again increasing firm should hire 2 security guards for minimal loss b) initial loss is 1250$ without loss and reduction is to 750$ with first guard so firm willing to pay anything less than 500$ c)if the radio is 50$ following same pattern as a) then asper calculation firm should hire 4 guards

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