a. Determine the current productivity index (10 points). b. This company wants t

Question

a. Determine the current productivity index (10 points).
b. This company wants to implement a total quality program in which
estimated to spend $ 85,000 in the year, but believes that by the end of the year there will be
made savings in costs and expenses that will allow you to improve your index by 10%
of productivity in relation to the current one. What is the amount, total weights, that
It is estimated that this program will be saved to achieve the improvement mentioned in
the productivity index? Consider the same sales and price. (10 points)
c. Determine the productivity index for each of the factors of the
production given in this problem (10 points) What is the input that
affects productivity? (5 points) The least affected? (5 points)

Resources PERFORMANCE OF THE
MEANS COST OF THE
MEANS Workforce 0.5 pieces / HR-man $ 200 / HR-man Machinery 2 Parts / hra-machine $ 55 / hra-machine Raw material 0.25 pieces / kg $ 80 / kg Electricity 0.1 pieces / kw-hra $ 100 / kw-hra

Explanation / Answer

1. Workforce cost = $200 / 0.5 piece = $400 per piece /hr

2.Machinery cost = 2 parts / $55 = $27.5 per part /hr

3. Raw Material = $80 / 0.25 piece = $320 per piece

4. Electricity = $100 / 0.1 piece = $1000 per piece /hr

Productivity index = Units of output / units of input = 1/ 400+27.5+320+1000 = 1/ 1747.5 = 0.000572

It mean that $1 can produce 0.000572 units per hour.

Ans 2 : 10% improvement in the index will see $1 produce 0.000572x1.1 units = 0.000629 per hour.

or $1589 per hour to produce one unit.

If we assume that the plant works for 8 hours a day for 300 days per year, the units produced = 8x300 =2400

Total savings through the initiative = (1757.5-1589) x2400 = 168.5 x2400 = 404400

C. The individual indices

Workforce = 1/400 =0.0025

Machinery = 1/27.5 = 0.036

Raw Material = 1/320 = 0.003125

Electricity = 1/1000 = 0.001

The least affected index is the machinery whereas the most affected one is electricity which has highest fraction of the cost part.

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