For the production of part R-193, two operations are being considered. The capital investment associated with each operation is identical.

Operation 1 produces 1,400 parts per hour. After each hour, the tooling must be adjusted by the machine operator. This adjustment takes 20 minutes. The machine operator for Operation 1 is paid $19 per hour (this includes fringe benefits).

Operation 2 produces 1,650 parts per hour, but the tooling needs to be adjusted by the operator only once every two hours. This adjustment takes 45 minutes. The machine operator for Operation 2 is paid $12 per hour (this includes fringe benefits).

Assume an 8-hour workday. Further assume that all parts produced can be sold for $0.55 each.

a. Should Operation 1 or Operation 2 be recommended?

b. What is the basic tradeoff in this problem?