Mathematical Skills for Business

Solution Based on Simple Aggregate Index-Laspeyres Price Index-Paasche Price Index

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Abstract

Answer 1.12 (a).

The business should consider getting rid of the outsourcing of their business processes by

calling of the agency costs, thereby not considering the employment of temporary staffs, as

their percentage is higher in the workforce, and they are significantly adding to the total costs

of the organization. As the permanent staffs are quantitatively more trained and committed to

their services towards the business, their contribution towards the defect cost is considerably

lower and indirectly proportional. Therefore, the business should consider retaining the

permanent employees and calling off the temporary employees.

Answer 1.12 (b).

Further investigation can be taken up based on the information on the distribution of cash

flows over the quarters, the breakup of the revenue structure in terms of revenue earned by

permanent and temporary employees, the duration of permanent and temporary employees in

the business, and tax considerations for both the cases. These pieces of information can lead

us to restrict ourselves from taking a biased decision based on the information provided on

cost components only. Once we can get the information about the revenue streams, then we

can judge the per capita output level, and that too on a weekly basis, so that we can

understand the contribution of both the parties in the business process as a whole.