5 and 6 Chapter Two Competitiveness, Strategy, and Productivity what is the 5. A

Question

5 and 6

Chapter Two Competitiveness, Strategy, and Productivity what is the 5. An operation has a 10 percent scrap rate. As a result, 72 pieces per hour are produced potential increase in labor productivity that could be achieved by eliminating the scrap? 40 hours. In the previous week, the same worker produced 138 units while working 36 hours. Did the worker's productivity increase, decrease, or remain the same? Explain. 6A manager checked production records and found that a worker produced 160 units while workine vice units each day. The hourly wage rate is $25, the overhead rate is 1.0 times labor cost, and mate rial cost is $5 per customer )The following table shows data on the average number of customers processed by several bank ser Customers Unit Employees Processed/Day 36 40 60 20 a. Compute the labor productivity and the multifactor productivity for each unit. Use an eight- hour day for multifactor productivity b. Suppose a new, more standardized procedure is to be introduced that will enable each employee to process one additional customer per day. Compute the expected labor and multifactor produc- tivity rates for each unit. 8.A property title search firm is contemplating using online software to increase its search productiv- ity. Currently an average of 40 minutes is needed to do a title search. The researcher cost is $2 per minute. Clients are charged a fee of $400. Company A's software would reduce the average search time by 10 minutes, at a cost of $3.50 per search. Company B's software would reduce the average search time by 12 minutes at a cost of $3.60 per search. Which option would have the higher pro- ductivity in terms of revenue per dollar of input? A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation fees generated per dollar of input. in

Explanation / Answer

5.

Given:

Scrap rate = 10%

Good production = 72 pc/hour

Actual production (A) = good units production (G) + rejected units due to scrap (R)

Rejected units due to scrap (R) = Actual production x scrap rate = A x 10% = 0.1A

A = G + R = G + 0.1A

A – 0.1A = G

0.9A = G

A = G/0.9 = 72/0.9 = 80 pcs/hour

If scrap is eliminated, the output will increase to 80 pcs/hr.

Improved labor productivity = 80 pcs/hr

Increase in labor productivity = (Improved – actual)/actual = (80 – 72)/72 x 100 = 11.11%

Thus, labor productivity will increase by 11.11% if the scrap is eliminated.

6.

Current week:

Output = 160 units

Labor hours = 40 hours

Current labor productivity = Output/labor hours = 160/40 = 4 units per hour

Current labor productivity = 4 units per hour

Previous week:

Output = 138units

Labor hours = 36 hours

Previous week labor productivity = Output/labor hours = 138/36 = 3.83 units per hour

Previous week labor productivity = 3.83 units per hour

Since current labor productivity is more than previous one, the labor productivity has been increased.

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