Question

1) Susan has a part-time "cottage industry" producing seasonal plywood yard ornaments for resale at local craft fairs and bazaars. She currently works 8 hours per day to produce 16 ornaments.

a. What is her productivity?

b. She thinks that by redesigning the ornaments and switching from use

of a wood glue to a hot-glue gun she can increase her total

production to 20 ornaments per day. What is her new productivity?

c. What is her percentage increase in productivity?

2) A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm typically cleaned 70 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees worked 20 days per month, 8 hours a day. The company decided to switch to a larger cleaning machine. Last April, they cleaned 60 tank cars in only 15 days. They utilized 12 gallons of solvent, and the two employees worked 6 hours a day.

1. Compute the single factor productivity for raw material and labor with the standard equipment.

2. Compute the single factor productivity for raw material and labor with the larger machine.

3) The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some small changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. These changes did not require any change in the amount of capital spending or energy use. What is the firm's new labor productivity?

4) Mark's Ceramics spent $4000 on a new kiln last year in the belief that it would cut energy usage 25% over the old kiln. This kiln is an oven that turns "greenware" into finished pottery. Mark is concerned that the new kiln requires extra labor hours for its operation. Mark wants to check the energy savings of the new oven, and also to look over other measures of their productivity to see if the change really was beneficial. Mark has the following data to work with:

Last Year This Year

Production (finished units) 4000 4000

Greenware (pounds) 5000 5000

Labor (hrs) 350 375

Capital ($) 15000 19000

Energy (kWh) 3000 2600

Were the modifications beneficial?

5) The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. Labor costs average $10 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3,000 per day, and rose to $3,200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day. What is the firm's multifactor productivity before and after the changes?

Answer 1

Answer 1 - Productivity = Total output/Total Input

(a) Total Output = 16 Ornaments

Total Input = 8 hours

Productivity = 16/2 = 2

(b) Total Output = 20 Ornaments

Total Input = 8 hours

Productivity = 20/8 = 2.5

(c) Percentage increase in productivity = (2.5 - 2)/2*100

= 0.5/2*100 = 25%

Answer 2: Given,

	Standard Equipment	Large Equipment
Output/month	70	60
Solvent	10	12
No. of Workers	2	2
Days	20	15
Hours	8	6

(1) Labour hour = no. of employees * no. of days * working hours

= 2*20*8 = 320 hours/month

Labour Productivity (standard equipment) = Output / Total hour

= 70 / 320 = 0.218 = 0.22 car per labour hrs

Raw material productivity (standard equipment) = Output / solvent used

= 70 / 10 = 7 car per gallon

(2) Labour hour = no. of employees * no. of days * working hours

= 2*15*6 = 180 hours

Labour Productivity (Large Equipment) = Output / Total hour

= 60 / 180 = 0.33 car per labour hrs

Raw material productivity (Large Equipment) = Output / solvent used

= 60 / 12 = 5 cars per gallon

Answer 3: Labour Productivity before any changes = Output / Total hours

= 500 / 16 = 31.25

Labour Productivity after some changes = Output / Total Hours

= 600 / 16 = 37.5

So firms new labour productivity = 37.5

Answer 4:

Resouce	Last Year	This Year	Change	Percentage Change
Labour	4000/350 = 11.43	4000/375 = 10.67	-0.76	-6.7%
Capital	4000/15000 = 0.27	4000/19000 = 0.21	-0.06	-22.2%
Energy	4000/3000 = 1.33	4000/2600 = 1.54	0.21	15.4%

From the above that we find that the modifications didnot beneficial as it didnot give expected energy saving and also labour and capital productivity is Decreased.

Answer 5:

Multifactor Productivity before any changes = 500 boxes / ($10*5*16 + $3000 + $400)

= 500 / 4200 = 0.119 boxes per dollar

Multifactor Productivity after some moderate changes = 600 boxes / ($10*5*16 + $3200 +$400)

= 600 / 4400 = 0.136 boxes per dollar