A U.S. company has two manufacturing plants, one in the United States and one in
ID: 355994 • Letter: A
Question
A U.S. company has two manufacturing plants, one in the United States and one in another country. Both produce the same item, each for sale in their respective countries. However, their labor productivity figures are quite different. The analyst thinks this is because the U.S. plant uses more automated equipment for processing while the other plant uses a higher percentage of labor. a. Explain how the labor productivity figures can be misleading in the scenario presented above. b. Can you suggest other measures of productivity for comparing the two plants that would be more meaningful? Explain your answer.Explanation / Answer
a. The labor productivity will differ because the plant in US uses automated equipment and the plant in the other country uses higher percentage of labor. The labor productivity figures can be misleading because it will be considered that the US plant has more labor productivity which is actually not rues because the US plant has more automation techniques which makes the production more compared to the plant in the different country.
b. I believe that instead of quantity if quality is considered to be a measure of productivity for the plants then that would be a better option and more meaningful because an automated plant cannot be compared with a manual plant at any point in terms of quantity.
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