Question

Katrina Design has decided to experiment with two alternative manufacturing approaches, identified as MF and LI, for producing men’s fashions. The firm expects the total demand to be 28,000 suits. Management estimates the required input resources using the different manufacturing approaches are:

	Direct Materials (yards)				Direct Labor (hours)
MF		248,000				108,000
LI		188,000				128,000

The cost of direct materials is $13 per yard; the cost of direct labor is $28 per hour.

Required:

1. Compute the partial operational productivity ratios for each of the production approaches.

2. Calculate the partial financial productivity ratios for each of the production approaches.

3. Compute the total productivity ratios for each of the production approaches.

(For all requirements, round your answers to 4 decimal places.)

Answer 1

1	Operational Partial Productivity	HINT	HINT
		MF	LI	MF	LI
	Direct materials	0.1129	0.1489	28000/248000	28000/188000
	Direct labor	0.2593	0.2188	28000/108000	28000/128000
2	Financial Partial Productivity
		MF	LI	MF	LI
	Direct materials	0.0087	0.0115	28000/3224000	28000/2444000
	Direct labor	0.0093	0.0078	28000/3024000	28000/3584000
3	Total Productivity	0.0045	0.0046	28000/6248000	28000/6028000
	Workings:
	Manufacturing Cost
		MF	LI	MF
	Direct materials	3224000	2444000	248000*13	188000*13
	Direct labor	3024000	3584000	108000*28	128000*28
	Total	6248000	6028000