You should include all your calculations and provide a narrative that explains the formulae you have used within the Excel spreadsheet for submission. You have been asked to review the costs of operations at a production plant that employs 25 staff members. Some of these are permanent staff and some are temporary staff. Since 2009, there have always been 25 staff employed in the production plant, but the ratio of permanent staff to temporary staff has varied. All staff work a 40 hour week. You also have data available since 2009, that relates to the costs of ‘defects’. A ‘defect’ is a product that is not made to a satisfactory standard, and needs to be recalled and replaced.

1. 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.