instructor. Also, round your solution to three decimal places. I pledge on my ho
ID: 344742 • Letter: I
Question
instructor. Also, round your solution to three decimal places. I pledge on my honor that I have not given or received any unauthorized assistance on this Exam. I further pledge that I have not copied any material from a book, article, the internet or any other source except where I have expressly cited the source Name (Print) Yaie Liu Signature Date:_ Answer any TWO questions (Each question is worth 20 points) 1. Describe the meaning of productivity. Why is it important? Describe the types of productivity measures. (5 points) 1. a) Sam Donald is the president of Summit Manufacturing, a producer of Go-Kart tires. Summit makes 1,000 tires per day with the following resources: Labor Raw material: Energy: Capital: 400 hours per day @ 12.50 per hour 20,000 pounds per day @ $1 per pound $5,000 per day $10,000 per day a. What is the labor productivity per labor hour for these tires at Summit Manufacturing (2 Points) b. What is the Multifactor productivity for these tires at Summit Manufacturing? (4 Points) NOTE: Round your answer to 5 decimal digits c. What is the percent change in multifactor productivity if Summit can reduce the energy bill to $1,000 per day without cutting production or changing any other inputs? (4 points)Explanation / Answer
1. Meaning of productivity is ratio of output to input. It is important in order to compare different processes, machines, worker.
There are broadly two types of productivity measures being used.
Labor productivity - measures output per unit labor input
Multifactor productivity - measures output per unit total input cost
1.a.
Labor productivity = Output / Total labor hours = 1000 tires per day / 400 hours = 2.5 tires per labor hour
b. Multifactor productivity = Output / Total input cost = 1000 tires per day / (400*12.5+20000*1+5000+10000) = 0.02500 tires per dollar input
c. New multifactor productivity = 1000/(400*12.5+20000*1+1000+10000) = 0.02778
Percent change in multifactor productivity (MFP) = (New MFP - Old MFP)/Old MFP = (0.02778-0.02500)/0.02500 = 11.1 %
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