1.5 – page 50 & 51
Lori Cook produces “Final Exam Care Packages” for resale by her sorority. She is currently working a total of 5 hours per day to produce 100 care packages.
a) What is Lori’s productivity?
b) Lori thinks that by redesigning the package, she can increase her total productivity to 133 care packages per day. What will be her new productivity?
c) What will be the percentage increase in productivity if Lori makes the change?
George Kyparisis (using data from Problem 1.6) determines his costs to be as follows:
Labor: $10 per hour
Resin: $5 per pound
Capital expense: 1% per month of investment
Energy: $.50 per BTU
Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis with dollars as the common denominator.
1.9 Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,000 tires per day with the following resources:
Labor: 400 hours per day @ 12.50 per hour
Raw Material 20,000 pounds per day @ 1 per pound
Energy 5,000 per day
Capital Costs 10,000 per day
a) What is the labor productivity per labor-hour for these tires at Lakefront Manufacturing?
b) What is the multifactor productivity for these tires at Lakefront Manufacturing?
c) What is the percent change in multifactor productivity if Fok can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?
Munson Performance Auto, Inc., modifies 375 autos per year. The manager, Adam Munson, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were labor, 10,000 hours; 500 suspension and engine modification kits; and energy, 100,000 kilowatt-hours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Munson?
Autos 375 per year
Labor 10,000 @ $20 per hour
Suspension & Engine Modification Kits 1 @ $1,000 each
Energy 100,000 @ $3 per kilowatt – hour
Lake Charles Seafood makes 500 wooden packing boxes for fresh seafood per day, working in two 10-hour shifts. Due to increased demand, plant managers have decided to operate three 8-hour shifts instead. The plant is now able to produce 650 boxes per day.
a) Calculate the company’s productivity before the change in work rules and after the change.
b) What is the percentage increase in productivity?
c) If production is increased to 700 boxes per day, what is the new productivity?
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