Question

6. Individual Problems

4-6 A copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 200,000 pages per day. One month ago, the firm added five workers, and productivity also increased by 100,000 pages per day. A copier costs about three times as much as a worker. Assume these increases in productivity per worker and productivity per copier are good proxies for future increases in productivity when hiring additional workers or purchasing additional copiers. Based on this information, the copy company should hire another worker or purchase another copier in order to expand output.

Answer 1

Because 2 copiers increased productivity by 200,000 pages per day, you can say that on average 1 copier increased productivity by 100,000 pages/day. Also, adding 5 workers increases productivity by 100,000 pages/day. On average, adding a worker increased productivity by 20,000 pages per day. Notice how the impact of an additional copier on productivity is 5 times as much when compared to the impact of an additional worker. But its cost is only 3 times as much. So the firm should purchase another copier.