While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
A) the next worker that offers to work an extra 8 hours should receive at least $80.
B) you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.
C) you would be willing pay up to $60 for someone to work another 6 hours.
D) you would lose $80 if one of your workers missed an entire 8 hour shift.

Question

Quizplus · Accepted Answer

The shadow price of $10 for stitching labor indicates that for each additional hour of stitching labor beyond the original right-hand value of 30 hours, the company is willing to pay up to $10 more. Since the lower limit is 24 hours and the upper limit is 36 hours, the company can safely increase the stitching labor by up to 6 hours. Therefore, choice C is correct - the company would be willing to pay up to $10 per hour, or $60 in total, for an additional 6 hours of stitching labor. The other choices are incorrect because they do not align with the shadow price and the allowable range for stitching labor.

While Glancing Over the Sensitivity Report, You Note That the Stitching