(1) Aztec Furnishings makes hand-crafted furniture for sale in its retail stores

Question

(1) Aztec Furnishings makes hand-crafted furniture for sale in its retail stores. The furniture maker has recently installed a new assembly process, including a new sander and polisher. With this new system, production has increased to 1999 pieces of furniture per month from the previous 1116 pieces of furniture per month. The percentage of defective items produced has dropped from 10.8% to 0.5%.

How much of the improvement in productivity is due to improvements in quality?  %

2) A company that makes kitchen chairs wants to compare productivity at two of its facilities. At Facility A, 60 workers produced 2520 chairs. At Facility B, 36 workers produced 1510 chairs during the same time period. Which facility was more productive?

How much higher is the productivity of the more productive facility?  %

Explanation / Answer

1.

Productivity = Output / Input

For 'Output', consider the number of defect-free parts.

In the case of 'input', the additional cost of the new sander and polisher should be considered after improvement. But since this is not given, we will consider that to be negligible. So, the input does not change after improvement. So, the % change in productivity is the percent change in output only (since there is no change in the input).

Output (before change) = 1116 x (1 - 0.108) = 995.472

Output (after change) = 1999 x (1 - 0.005) = 1989.005

So, % increase in productivity = (1989.005 - 995.472) / 995.472 = 99.81%

2.

Productivity = Output / Input

So, productivity of A = 2520 / 60 = 42 chairs / worker

Productivity of B = 1510 / 36 = 41.944 chairs / worker

So, facility A is more productive. It is higher by (42 - 41.944) / 41.944 = 0.1325%

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