Problems | Show your work for full credit P1. The three person crew worked their

Question

Problems | Show your work for full credit P1. The three person crew worked their way through the prestigious Edmond Oaks neighborhood mowing lawns, edging, applying fertilizer and weed treatm the clippings for use as much as part of their new green initiative. Their pricing scheme for each service as well as the labor hours and material requirements of each service appear in the following table. ents where necessary, and collecting all Labor Material Price $75 20 $120 $80 5% discount × # of services Service Mow lawn Ed $2 ge Fertilizer treatment Weed prevention treatment Multiple services 1 hour 0.25 0.25 0.25 Workers are paid at a rate of $10 per hour, and overhead is charged at 120% (or 1.2 times) labor costs. For a customer that gets both mowing and edging, for example, their $95 bill (S75+$20-S95) would be discounted for a total of 10% (5% × 2=10%) off the $95 straight charge for a cost of $85.50 A customer receiving three services would get a 15% discount (3× 5%=15%) off their service bill. Labor hours shown in table are total hours for the three-person crew. The mix of orders processed appear in the following table Service Mow lawn and Edge Mow lawn. Edge and Fertilizer treatment Mow lawn. Edge and Weed prevention treatment Mow lawn and Fertilizer treatment # of Customers (a) (5 pts) What is their multifactor productivity for these orders in the prestigious Edmond Oaks neighborhood? (b) (4 pts) Which of the service combinations they are providing is their most productive from a multifactor perspective? (c) (3 pts) What is their labor productivity for the same mix of orders?

Explanation / Answer

(a) Output (Revenue)= Sumproduct of # of customers * Service bills of respective customers * ( 1 - 5% * # of services)

= 6*(75+20)*(1 - 5%*2) + 3*(75+20+120)*(1 - 5%*3) + 2*(75+20+80)*(1 - 5%*3) + 2*(75+120)*(1 - 5%*2)

= $ 1709.75

Input (Total cost) = Labor cost + Overhead cost + Material cost

= (6*(1+.25) + 3*(1+.25+.25) + 2*(1+.25+.25) + 2*(1+.25))*10*(1+1.2) + 6*(2+1)+3*(2+1+45)+2*(2+1+25)+2*(2+45)

= 697

Multifactor productivity = Output / Input = 1709.75/697 = 2.45

(b)

Multifactor productivity of first service combination (Mow lawn and Edge) = (75+20)*(1 - 5%*2)/(1.25*10*(1+1.2)+2+1) = 2.80

Multifactor productivity of second service combination (Mow lawn, Edge, Fert.) = (75+20+120)*(1 - 5%*3)/(1.5*10*(1+1.2)+2+1+45) = 2.26

Multifactor productivity of third service combination (Mow lawn, Edge, Weed.) = (75+20+80)*(1 - 5%*3)/(1.5*10*(1+1.2)+2+1+25) = 2.44

Multifactor productivity of fourth service combination (Mow lawn, Fert..) = (75+120)*(1 - 5%*2)/(1.25*10*(1+1.2)+2+45) = 2.36

Multifactor productivity of first service combination (Mow lawn and Edge) is the highest. Therefore it is their most productive from a multifactor productivity.

(c) Labor productivity = Output / Labor cost

= 1709.75/((6*(1+0.25)+3*(1+0.25+0.25)+2*(1+0.25+0.25)+2*(1+0.25))*10)

= 9.77

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