Question

A company that produces Barbie Dolls is currently utilizing 12 hours per day to Complete 100 pcs of barbie dolls. The process engineer , Engr Sofie continuously conducts evaluation to improve the processes. Finally, she is convinced that by changing the nails being attached to the doll , the new output can be 220 dolls. The material cost per doll is BD 4.75 ; while additional supplies needed to complete the Barbie dolls cost BD 1.0 and labor is paid at the rate of BD 4 per hour .

In producing the dolls, energy cost is assumed to be BD 3.5 per day and water cost is at BD 0.75. Is there any improvement in productivity with the changes that

have been implemented by the process engineer? Prove your answer though presenting the labor productivity and multifactor productivity.

  

Answer 1

Solution:

given data:

• Barbie Dolls is currently utilizing 12 hours per day to Complete 100 pcs of barbie dolls.
• The new output can be 220 dolls.
• The material cost per doll is BD 4.75.
• While additional supplies needed to complete the Barbie dolls cost BD 1.0 and labor is paid at the rate of BD 4 per hour.
• Energy cost is assumed to be BD 3.5 per day and water cost is at BD 0.75.

Old procedure:

labor productivity=Output/Input=100/(4*12)=2.083

Multifaceted productivity= Output/Input=100/((4*12)+(4.75*100)+(3.5+0.75))=0.1896

New procedure:

labor productivity=Output/Input=220/(4*12)=4.583

Multifaceted productivity= Output/Input=220/((4*12)+(4.75*220)+(3.5+0.75+1))=0.200

From the old procedure to a new process, we could see improvement in profitability.