Question

DEKA produces controller boards on a 10-person assembly line. On a recent day, 160 controller boards were produced during an 8-hour shift. Each labor is paid $80 per day.

Details of the other resources are as follows:

Raw Material	200 kg per day @$1 per kg
Energy	$100 per day
Capital Costs	$600 per day

a) Calculate the labor productivity of the line.

b) Calculate the multifactor productivity.

c) DEKA decided to improve its multifactor productivity by 10%. In order to do so it needs to reduce one of its costs.

i) If they decide to decrease the cost of raw material only, what percent of material cost needs to be reduced to achieve the target? Interpret your results.

ii) If they decide to decrease the cost of labor only, what percent of labor cost needs to be reduced to achieve its target? Interpret your results.

please give a solution in typed form

Answer 1

Answer a= Labor productivity = 160/10 =16 controller boards/ labor

Answer b= Multifactor productivity =160/(10*80+200*1+100+600)=0.0941

Answer c= Increased multifactor productivity =0.0941*1.1=0.10351

I= Let x is the new cost of raw material

0.10351=160/(10*80+200*x+100+600)

1500+200x=1545.74

x=0.2287

So percentage decrease in raw material cost = ((1-0.2287)/1)*100%=77.13%

ii= When only labor cost is reduced

I= Let x is the new cost of labor cost

0.10351=160/(10*x+200*1+100+600)

900+10x=1542.74

X=64.57

So percentage decrease in the labor cost = (80-64.57)/80=0.1929 or 19.29%