Problem -1
A catering company prepared and served 300 meals at an anniversary celebration last week using eight workers. The week before, six workers prepared and served 240 meals at a wedding reception.
a. For which event was the labor productivity higher? Explain.
b. What are some possible reasons for the productivity differences?
Problem -2
The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks, obtaining these figures:
week Crew Size Yards Installed
1 4 96
2 3 72
3 4 92
4 2 50
5 3 69
6 2 52
Compute the labor productivity for each of the weeks. On the basis of your calculations, what can you conclude about crew size and productivity?
Problem -3
Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. What do the productivity figures suggest? Assume 40-hour weeks and an hourly wage of $12. Overhead is 1.5 times weekly labor cost. Material cost is $6 per pound.
week Output (units) Workers Material (lbs)
1 30,000 6 450
2 33,600 7 470
3 32,200 7 460
4 35,400 8 480
Problem -4
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used five workers, who produced an average of 80 carts per hour. Workers receive $10 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $10 per hour while output increased by four carts per hour.
a. Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity.
b. Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure.
c. Comment on the changes in productivity according to the two measures, and on which one you believe is the more pertinent for this situation.
Problem -5
An operation has a 10 percent scrap rate. As a result, 72 pieces per hour are produced. What is the potential increase in labor productivity that could be achieved by eliminating the scrap?
Problem -6
A manager checked production records and found that a worker produced 160 units while working 40 hours. In the previous week, the same worker produced 138 units while working 36 hours. Did the worker’s productivity increase, decrease, or remain the same? Explain.
Problem -7
The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is $25, the overhead rate is 1.0 times labor cost, and material cost is $5 per customer.
Unit Employees Customers
Processed/Day
A 4 36
B 5 40
C 8 60
D 3 20
Problem -8
A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 40 minutes is needed to do a title search. The researcher cost is $2 per minute. Clients are charged a fee of $400. Company A’s software would reduce the average search time by 10 minutes, at a cost of $3.50 per search. Company B’s software would reduce the average search time by 12 minutes at a cost of $3.60 per search. Which option would have the higher productivity in terms of revenue per dollar of input?
Problem -9
A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.
