Homework Problems 2, 4, 8
2) Suds and Duds Laundry washed and pressed the following numbers of dress shirts per week
2a) Calculate the labor productivity ratio for each week
Productivity ratio = Output (shirts)/Input (hours)
- Week 1: 68/24 = 2.833
- Week 2: 130/46 = 2.826
- Week 3: 152/62 = 2.452
- Week 4: 125/51 = 2.451
- Week 5: 131/45 = 2.911
2b) Explain the labor productivity pattern exhibited by the data
Throughout each week, the work crew either increased in size or worked more hours. However, the labor productivity ratio was around the same as Week 1, as productivity hardly increased. The lowest productive weeks were Week 3 and 4 and that’s when all three were working together.
4) At Symtecks, the output of a specific process is valued at $100 per unit. The cost of labor is $50 per hour including benefits. The accounting department provided the following information about the process for the past four weeks
4a) Use the multifactor productivity ratio to see whether recent process improvements had any effect and, if so, when the effect was noticeable
Multifactor Productivity Ratio = (Units produced * value per unit)/(Labor + Material + Overhead)
- Week 1: (1,124 * $100)/(12,735 + 21,041 + 8,992) = 2.62813
- Week 2: (1,310 * $100)/(14,842 + 24,523 + 10,480) = 2.62814
- Week 3: (1,092 * $100)/(10,603 + 20,442 + 8,736) = 2.745
- Week 4: (981 * $100)/(9,526 + 18,364 + 7,848) = 2.7449
4b) Has labor productivity changed? Use the labor productivity ratio to support your answer
Recent process adjustments had slim-to-no effect, as the multifactor productivity ratio ranged from about 2.63 to 2.75. In other words, the relationship between units produced and the costs (labor, material, overhead) associated with it were identical. Also, Weeks 3 and 4 had fewer units produced than Weeks 1 and 2, which resulted in them having the most productive week, as costs weren’t as high as the other weeks.
8) Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant is considering choosing between two different processes, named Alpha and Beta, which can be used to make two component parts A and B. To make the correct decision, the managers would like to compare the labor and multifactor productivity of process Alpha with that of process Beta. The value of process output for component A and B are $175 and $140 per unit, respectively. The corresponding overhead costs are $6,000 and $5,000, respectively.
8a) Which process, Alpha or Beta, is more productive
Labor productivity of process Alpha and Beta = ((Units produced (A) * value per unit (A)) + (units produced (B) * value per unit (B))/(Labor (A) + Labor (B))
- Alpha = (50 * $175) + (60 * $140)/($1,200 + $1,400) = 6.596
- Beta = (30 * $175) + (80 * $140)/($1,000 + $2,000) = 5.483
Multifactor productivity of process Alpha and Beta = ((Units produced (A) * value per unit (A)) + (units produced (B) * value per unit (B))/(Total labor and material costs (A and B) + overhead)
- Alpha = (50 * $175) + (60 * $140)/($1,200 + $1,400 + $2,500 + $3,000 + $6,000)
- = 1.216
- Beta = (30 * $175) + (80 * $140)/($1,000 + $2,000 + $1,400 + $3,500 + $5,000)
- = 1.275
8b) What conclusions can you draw from your analysis?
Process Alpha has 20.3 % higher labor productivity rate and Process Beta has 4.85 % higher multifactor productivity rate.
These numbers conclude that Process Alpha was more efficient in converting labor into consumer electronic products than Process Beta. On the other hand, Process Beta considers material and overhead costs, which is more productive than Process Alpha.
Completed by Mikael La Ferla
Mikael La Ferla 