/Problem 4 Modern Lumber Company has been able to produce 240 crates per 100 log
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Question
/Problem 4 Modern Lumber Company has been able to produce 240 crates per 100 logs with its current equipment. The company processes 100 logs per day and each log requires 3 labor-hours to process. If the company hires a professional buyer it can buy a better quality log at the same cost. A better quality log would yield 260 crates per 100 logs. However, the labor hours would increase by 8 hours because of the new hire. What will be the impact on productivity (measured in crates per labor-hours) if the buyer is hired?Explanation / Answer
Existing scenario:
Number of crates per day = 240
Number of labor hours = Number of logs*Labor hours for each log = 100*3 = 300
Productivity = Number of crates/Number of labor hours = 240/300 = 0.800
New scenario:
Number of crates per day = 260
Number of labor hours = Number of logs*Labor hours for each log + Additional hours = 100*3 +8 = 308
Productivity = Number of crates/Number of labor hours = 260/308 = 0.844
Thus, productivity will increase from 0.800 to 0.844
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