Productivity, Competitiveness and Strategy Dr.

Mohammad Ekramol Islam

Problem:-1

A company that processes fruits and vegetables is able to produce 400 cases of canned
peaches in one – half hour with four workers. What is labor productivity?

Solution:

We know
Quantity produced
Labor productivity =
Labor hour

400 cases
=
(4 weeks )   1 hour / worker 
2 

400
=
2

= 200 cases per labor hour.

Problem:-2

A wrapping paper company produced 2000 rolls of paper one day. Standard price is
$1/roll. Labor cost was $160, material cost was $ 50 and overhead was $ 320; determine
the total productivity.

Solution:

We know
Quantity Producud @Sandard Price
Multi-factor productivity =
Labor cost + M.C + Overhad

2000 rolls $1 / roll

=
160 + 50 + 320

2000
=
530

= 3.77 rolls / dollar input.

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Problem:-3

Suppose that a company produced 300 standard bookcases last week using eight workers
and it produced 240 standard bookcases this week using six workers. In which period was
productivity higher? Explain.

Solution:

We know
Output
Productivity =
Input

Output
PLW =
Labor Input

300 Bookcases / worker

=
8 workers

= 42.50 bookcase / worker.

Output
PTW =
Labor Input

240 Bookcases / worker

=
6 workers

= 40 Bookcases / worker

The last year productivity was higher as 42.50 Bookcases was produced by one labor
inputs.

Problem:-4

The manager of a crew that installs carpeting has tracked the crew’s output over the past
several weeks obtaining these figures:-

week Crew size Yards installed

1 4 960
2 3 702
3 4 968
4 2 500
5 3 696
6 2 500

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Compute the labor productivity for each of the weeks. On the basis of your calculations,
what can you conclude about crew-size and productivity?

Answer:
We know,
Output
Productivity =
Input

960 Yards of Carpeting

p w1 = = 240 Yards of Carpeting / Crew
4 Crew

702 Yards of Carpeting

p w2 = = 234 Yards of Carpeting / Crew
3 Crew

968 Yards of Carpeting

p w3 = = 242 Yards of Carpeting / Crew
4 Crew

500 Yards of Carpeting

p w4 = = 250 Yards of Carpeting / Crew
2 Crew

696 Yards of Carpeting

p w5 = = 232 Yards of Carpeting / Crew
3 Crew

500 Yards of Carpeting

p w6 = = 250 Yards of Carpeting / Crew
2 Crew

In 4th weeks and 6th week’s productivity is higher, Crew Size 2 is giving maximum output
where as Crew Size 3 is not desirable.

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Problem:-5

Compute the multifactor productivity measure for the each of the week shown. What do
the productivity figure suggest ?Assume 40-hours weeks and an hourly wages of $12.
Overhead is 1.5 times weekly labor cost . Material cost is $6 per pound . Standard price is
$140 per unit.

Week Output(units) Workers Material(lbs)

1 300 6 45
2 338 7 46
3 322 7 46
4 354 8 48

Answer:
Quantity Produced @ Standard Price
Multifactor Productivity =
Labor cost + Material Cost + Overhead Cost

300 units  $ 140 / unit

P MF −1 =
(6  40  12) + (45 lbs  $6 / lbs) + (1.5  6  40  12)
42000
=
$2880 + $270 + $4320

42000
=
7470

= 5.62 units /$ input

338 units  $ 140 / unit

P MF −2 =
(7  40  12) + (46 lbs  $6 / lbs) + (1.5  7  40  12)
42000
=
$3360 + $276 + $5040

47320
=
8676

= 5.45 units /$ input

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

322 units  standard price

P MF −3 =
(7  40  12) + (46 lbs  $6 / lbs) + (1.5  7  40  12)
322  140
=
$3360 + $276 + $5040

45080
=
$8676

= 5.19 units /$ input

354  140
P MF −4 =
(8  40  12) + (48  6 ) + (1.5  8  40  12)
49560
=
3840 + 288 + 5760
49560
=
9888

= 5.01 units /$ input

Problem:-6

A company that makes shopping carts for supermarkets and other stores recently
purchased some new equipment that reduces the labor contents the jobs needed to
produce the shopping carts.
Prior to buying the new equipment the company used five workers , who produced an
average of 80 carts per hour. Workers receive $10 per hour and machine cost was $40 per
hour. With the new equipment ,it was possible to transfer one of the workers to another
department and equipment cost increased by $10 per hour while output increased by four
carts per hour.
a) Compute labor productivity under each system. Use carts per worker per hour as
the measure of productivity.
b) Compute the multi-factor productivity under each system. use carts per dollar cost
(labor + equipment) as the measure.
c) Comment on the changes in productivity according to the two measures, and on
which one you believe in the more pertinent for this situation?

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Solution:

a) prior to buying new machine

80 Cart / Hour
Productivity =
5 workers

= 16 casts per worker per hour.

After buying new machine

84 Cart / Hour
Productivity =
4 workers

= 21 casts per worker per hour.

b) Multifactor productivity

Before buying machine

80 Cart / Hour
P MF − Before =
(5  10 + 40) dollars
80
=
90

= 0.888  0.89 carts / dollar cost

84
p MF − After =
4  10 + 50

84
=
90

= 0.93 carts / Dollar cost

c) 2nd option is the best

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Problem:-7

A manager checked production records and found that a worker produced 160 unite while
working 40 hours. In the previous week, the same worker produced 138 units while
working 36 hours. Did the worker’s productivity increase or remaining same? Explain.

Solution:

Output
P ew −1 =
Input

160 units
=
40H

= 4 units / hour

Output
P ew − 2 =
Input

138 units
=
36H

= 3.83 units / hours

So, productivity is decreased for the last week.

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

Problem:-8

An operation has a 10% scrap rate. As a result, 72 pieces per hour is produced. What is
the potential increase in labor productivity that could be achieved by eliminating the
scrap?

Solution:

In producing 90 good items, scrap units are 10

10
In producing 1 good items, scrap units are
90
10  72
In producing 72 good items, scrap units are = 8 unit
90

If scrap can be eliminated thenP

In 72 units probable productivity may increase 8 units
8
In 1 units probable productivity may increase units
72
8  100
In 100 units probable productivity may increase = 11.11%
72

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Productivity, Competitiveness and Strategy Dr. Mohammad Ekramol Islam

1. The manager of a crew that installs carpeting has tracked the crew’s output
over the past several weeks obtaining these figures:-

week Crew size Yards installed

1 4 960
2 2 500
3 4 968
4 2 500

Compute the labor productivity for each of the weeks. On the basis of your
calculations, what can you conclude about crew-size and productivity?