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    JHUSTINE MHAY LEDESMA
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    A company that produces shopping carts purchased new equipment to reduce labor needs. The old system produced 80 carts per hour with 5 workers, while the new system produced 84 carts per hour with 4 workers. Labor productivity decreased from 16 to 12 units per worker, but overall factor productivity increased slightly from 0.90 to 0.93 with the new equipment. When factoring in different production mixes and prices between the old and new systems, the overall factor productivity decreased slightly from 100 to 95.6.

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    A company that produces shopping carts purchased new equipment to reduce labor needs. The old system produced 80 carts per hour with 5 workers, while the new system produced 84 carts per hour with 4 workers. Labor productivity decreased from 16 to 12 units per worker, but overall factor productivity increased slightly from 0.90 to 0.93 with the new equipment. When factoring in different production mixes and prices between the old and new systems, the overall factor productivity decreased slightly from 100 to 95.6.

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    4 views1 page

    Productivity

    Uploaded by

    JHUSTINE MHAY LEDESMA
    A company that produces shopping carts purchased new equipment to reduce labor needs. The old system produced 80 carts per hour with 5 workers, while the new system produced 84 carts per hour with 4 workers. Labor productivity decreased from 16 to 12 units per worker, but overall factor productivity increased slightly from 0.90 to 0.93 with the new equipment. When factoring in different production mixes and prices between the old and new systems, the overall factor productivity decreased slightly from 100 to 95.6.

    Copyright:

    © All Rights Reserved
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    of 1

    A company that makes shopping carts for supermarkets recently purchased some new

    equipment that reduced the labor content of the jobs needed to produce shopping carts.
    The information regarding the old system (before adding the new equipment) and after
    adding the new equipment are given below.

    Current System New Equipment Added


    Output/hr 80 84
    Workers 5 4
    Wage/hr $10 $10
    Machine/hr $40 $50

    a) Compute labor productivity for both the Old System and the New System

    OLD SYSTEM
    Productivity = Output / Input
    Productivity = 80 ÷ 5 = 16 units/workers

    NEW SYSTEM
    Productivity = Output / Input
    Productivity =84 ÷4 = 12 units/workers

    b) Compute AFP productivity for both the Old System and the New System

    OLD SYSTEM
    AFP = Output / Input
    AFP = 80 ÷ (5 * $10 + $40) = 80 ÷ 90 = 0.90

    NEW SYSTEM
    AFP = Output / Input
    AFP = 84 ÷ (4 * $10 + $50) = 84 ÷ 90 = 0.93

    c) Suppose production with old equipment was 30 units of cart A at price of $100 per cart,
    and 50 units of cart B at price of $120. Also suppose that production with new equipment is
    50 units of cart A, at price of $100 per cart, and 30 units of cart B at price of $120. Compare
    all factor productivity for old and new systems.

    AFP of the Old System = [(30)(100)+(50)(120)]/90 = 9000/90 = 100

    AFP of the New System = (50)(100)+(30)(120)]/90 = 8600/90 = 95.6

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