The finance department at Victory Vacations has proposed a new search engine for

Question

The finance department at Victory Vacations has proposed a new search engine for use by their travel consultants. They charge their clients a flat $90 for each vacation consultation and pay their clerks $25.00 per hour. Currently, a typical search process requires 56 minutes of each person's time. With the new tool, they will need only 34 minutes per search but they will be charged $2.80 per search in fees. What is the percent change in multifactor productivity compared to the current search process? (Keep two decimal places) Your Answer:

Explanation / Answer

For the current search process :

Revenue earned per search = $90

Cost per search ( @ $25 per 60 minutes ) of 56 minutes duration = ( 25/60 ) x 56 = $23.33

Multifactor productivity = revenue / Cost = 90/23.33 =3.857

New search process :

Revenue per search = $2.80

Cost per search ( @25 per 60 minutes ) of 34 minutes duration = $ ( 25/60) x 34 = $14.17

Multifactor productivity = revenue/ Cost = 2.80/14,17 = 0.1976

Percentage change in multifactor productivity compared to current search process

= ( 0.1976 – 3.857)/3.857 x 100

= - 3.659/3.857 x 100

= - 94.86%

Change in multifactor productivity = ( - ) 94.86%i.e REDUCTION IN MULTIFACTOR PRODUCTIVITY

Change in multifactor productivity = ( - ) 94.86%i.e REDUCTION IN MULTIFACTOR PRODUCTIVITY

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