Question

Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a variety of settings, wherever there are inputs and outputs. For example, consider LandscapeCity, a landscape design company that specializes in small landscape projects for people living in cities. Amanda Caldwell, the assistant manager, is in the process of trying to determine if productivity has been improving since she was hired 6 months ago. Because it is a design firm, labor is the only significant expense, but Amanda is unsure if the number of projects or the dollar of sales volume should be used when computing productivity. She has collected these data for sales and labor expenses for the past 6 months:

Month	Labor Expense			Number of Projects			Sales Dollars
1	$	20,830			43		$	20,990
2		27,840			58			22,800
3		20,292			50			29,680
4		14,094			14			19,460
5		14,826			19			22,580
6		21,492			50			22,420

Required:

1. Calculate the productivity for each month and the change in productivity from month to month using number of projects as the measure of output.

2. Calculate the productivity for each month and the change in productivity from month to month using sales dollars as the measure of output.

Answer 1

Answer 1)
	i	ii	iii		iv=ii/i	v
Month	Labor expenses	Number of project	Sales Dollar		Productivity	Productivity changes
1	20,830	43	20,990		0.00206	NA
2	27,840	58	22,800		0.00208	0.97%
3	20,292	50	29,680		0.00246	18.27%
4	14,094	14	19,460		0.00099	-59.76%
5	14,826	19	22,580		0.00128	29.29%
6	21,492	50	22,420		0.00233	82.03%
Answer 2)
	i	ii	iii		iv=iii/i	v
Month	Labor expenses	Number of project	Sales Dollar		Productivity	Productivity changes
1	20,830	43	20,990		1.00768	NA
2	27,840	58	22,800		0.81897	-18.73%
3	20,292	50	29,680		1.46265	78.60%
4	14,094	14	19,460		1.38073	-5.60%
5	14,826	19	22,580		1.523	10.30%
6	21,492	50	22,420		1.04318	-31.51%