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Hi there,
In the question, it says the staffing costs may vary by +-2.5% and the contribution +- by 10% – Now the answer at the back chooses to reduce the staffing cost variation by 2.5% and increase the contribution variation by 10% – why? I do not understand on what basis they chose this? can you add/ subtract as you please as it says +- in the question?
Thanks for your help in advance.
Anu
I want to asssume that you are s’posed to find the combinations that will yield the best outcome? If that is the case, you will minimise costs in order to boost profit i.e reduce staffing costs by 2.5 % – 100% – 2.5% = 97,5%, in order to increase contribution by 10% = 100 + 10 = 110% increase.
If you are told to find the worst possible outcome, this means increase staffing costs i.e 100 + 2.5% and contribution will reduce by 90%.
Hope this helps!
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