George Kyperisis makes bowling balls in his Miami plan. With increases in his co

ID: 468320 • Letter: G

Question

George Kyperisis makes bowling balls in his Miami plan. With increases in his costs, he has a newfound interest in efficiency. George is interested in determining the productivity of his organization. He would like to know of his organization is maintaining the manufacturing average of a 3% increase in productivity. He has the following data representing a month from last year and an equivalent month this year. The productivity charge for each of the inputs (Labor, Resin, Capital, and Energy) is: Labor Productivity Charge = 15.25 % Resin Productivity Charge = 33.33% Capital Invested Productivity Charge = 29.45%

Explanation / Answer

Last year

Now

Change

Units produced per labour hour (units produced / labour)

4.00

4.62

15.38%

(=(4.62-4)/4)

Resin consumed per unit (resin / units produced)

0.05

0.04

33.33%

(=(0.05-0.04)/0.04)

Capital invested per unit (capital invested / units produced)

7.08

9.17

-22.73%

(=(7.08-9.17)/9.17)

(NOTE: Negative sign of capital invested productivity change implies, more capital invested for same number of units in current year, hence capital productivity has reduced)