Lori is a company that produces 1000 boxes per day recruiting 5 staff with overh

Question

Lori is a company that produces 1000 boxes per day recruiting 5 staff with overhead cost of 200 USD . Each worker’s shift is 10 hours per day. Lori management decides to used JIT strategy to increase production to a total of 1200 boxes per day . Each labor hour cost 4 USD per day with a total overhead cost becoming now 300 USD •

What is labor productivity before and after the implementation of JIT strategy?

Was the strategy effective while considering labor hour factor? •

What is the productivity before and after the implementation of JIT strategy while considering both cost and labor wage factors?

Was the strategy still effective in this consideration?

Explanation / Answer

a) labor productivity before = output / labor hours = 1000/(5*10) = 20 boxes per labor hour

Labor productivity after = 1200/(5*10) = 24

b) yes, labor productivity increased after impementation of JIT. So the strategy was effective considering labor hour factor.

c) Total productivity before = output / total cost = 1000/(5*10*4+200) = 2.5 boxes per $

After = 1200/(5*10*4+300) = 2.4 boxes per $

d) total productivity decreased after JIT. Therefore the strategy was not effective in this consideration.

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