solution

Quantitative methods can help managers evaluate alternative sales and operations plans on the basis of cost. These methods require cost estimates for each of the controllable variables, such as overtime, subcontracting, hiring, firing, and inventory investment. Say that the existing workforce is made up of 10,000 workers, each having skills valued at $40,000 per year. The plan calls for “creating alternative career opportunities”—in other words, laying off 500 employees. List the types of costs incurred when employees are laid off, and make a rough estimate of the length of time required for payroll savings to recover restructuring costs. If business is expected to improve in one year, are layoffs financially justified? What costs are incurred in a layoff that are difficult to estimate in monetary terms?