QUESTION 1 A Company that makes shopping carts for supermarkets and other stores

Question

QUESTION 1 A Company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduices the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company u average of 87 carts per hour. Workers receive $15 per hour, and machine coast was $43 per hour. With the new equipment, it was possible to sed 7 workers, who produced an her department, and equipment cost increased by S14 per hour while output increased by four carts per hour. Compute the multifactor productivity (MFP) (labor plus equipment) under the Prior to buying the new equipment. The MFP (cartss) (round to 4 decimal places) b) Compute the prodctivy changes betwehitd after burying the new equipment. The productivity rowth 1% (round to 2 decimal places) QUESTION 2 Compute the multifactor productivity measure for an s hour day in which the usable output was 630 units, produced by 5 workers who used 905 pounds of materials. Workers have an horly wage of 21 and material cost is 1.9 per pound. Overhead is 1.6 times labor cost. The multifactor productivity (units's) (round to 4 decimal places) QUESTION 3 A health club has 4 employees who work on lead generation. Each employee works 30 hours a week, and is paid $19 an hour. Each employee identifies an average of 288 possible leads a week from a list of 8.000 names. Approximately 10 percent of the leads become members and pay a one-time fee of S110. Material costs are S198 per week, and overhead costs are S1,055 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. The multifactor productivity for this operation in fees generated per dollar of input (round to 4 decimal places)

Explanation / Answer

Question-1

Given values:

Before new equipment purchase

Number of workers = 7

Output produced = 87 carts per hour

Labor wage = $15 per hour

Machine cost = $43 per hour

After new equipment purchase

Number of workers = 6

Output produced = 91 carts per hour

Labor wage = $15 per hour

Machine cost = $57 per hour

Solution:

(a) Multi-factor productivity (MFP) prior to buying the new equipment is calculated as;

MFP = Number of carts produced / (Total labor cost + Total equipment cost)

MFP = 87 / [($15 x 7) + $43]

MFP = 87 / 148

MFP prior to buying the new equipment = 0.5878 carts/$

(b) The % growth in productivity between the prior to and after buying the new equipment is calculated as;

Growth in productivity = [(Productivity after purchase - Productivity before purchase) / Productivity before purchase] x 100

Multi-factor productivity (MFP) after buying the new equipment is calculated as;

MFP = Number of carts produced / (Total labor cost + Total equipment cost)

MFP = 91 / [($15 x 6) + $57]

MFP = 91 / 147

MFP after buying the new equipment = 0.6190 carts/$

Putting the calculated values in the above formula, we get;

Growth in productivity = [(0.6190 - 0.5878) / 0.5878] x 100

Growth in productivity = (0.0312 / 0.5878) x 100

Growth in productivity = 5.31%

Question-2

Given values:

Usable output = 630 units

Number of working hours = 8

Number of workers = 5

Labor wage = $21 per hour

Total labor cost = $21 x 5 x 8 = $840

Material used = 905 pounds

Material cost = $1.9 per pound

Total material cost = $1.9 x 905 = $1,719.5

Overhead = 1.6 times labor cost

Total overhead cost = 1.6 x $840 = $1,344

Solution:

Multi-factor productivity (MFP) is calculated as below:

MFP = Total output / (Total labor cost + Total material cost + Total overhead cost)

MFP = 630 / ($840 + $1,719.5 + $1,344)

MFP = 630 / 3903.5

MFP = 0.1614 units/$

Question-3

Solution:

Multi-factor productivity (MFP) is calculated as below:

MFP = (Possible leads x Conversion percentage x Number of workers x One-time fee) / (Total labor cost + Total materials cost + Total overhead cost)

MFP = (288 x 10% x 4 x $110) / [(4 x 30 x $19) + $198 + $1055)]

MFP = 12672 / 3533

MFP = 3.5868 fees generated per dollar input

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