To determine the productivity increase for each option in terms of labor, power, and both factors, let's

calculate the changes for each option and compare them.

Item Current Option 1 Option 2 Option 3

Number of Staff 50 -22% = 39 -20% = 40
Working 8 25% = 10
hours/day
Payroll cost/hour 15 -20% = $12.00
Machine 2 150% = 5
KWH used 200 10% = 220 KWH
Power cost/KWH 1 100% = $2.00
Units produced 20 70% = 34
Material cost/unit 6 -50% = $3.00

Option 1:

Labor change: Reduce staff members by 22% and payroll cost per hour by 20%.
New staff members = 50 - (22% of 50) = 39 staff members
New payroll cost per hour = $15.00 - (20% of $15.00) = $12.00
Power change: Raise power cost per KWH by 100%.
New power cost per KWH = $1.00 * 2 = $2.00
Both factors: Labor and power changes occur.

OPTION 1:

Labor productivity increase:

Old labor cost per day = 50 staff members * 8 hours * $15.00 per hour = $6,000.00
New labor cost per day = 39 staff members * 8 hours * $12.00 per hour = $3,744.00
Labor productivity increase = (Old labor cost per day - New labor cost per day) / Old labor cost per day *
100
Labor productivity increase = ($6,000.00 - $3,744.00) / $6,000.00 * 100 = 37.60%

Power productivity increase:

Old power cost per day = 2 machines * 200 KWH * $1.00 per KWH = $400.00
New power cost per day = 2 machines * 200 KWH * $2.00 per KWH = $800.00
Power productivity increase = (Old power cost per day - New power cost per day) / Old power cost per
day * 100
Power productivity increase = ($400.00 - $800.00) / $400.00 * 100 = -100%
OPTION 2:

Labor change: Reduce staff members by 20%.

New staff members = 50 - (20% of 50) = 40 staff members
Material cost change: Reduce material cost per unit by 50%.
New material cost per unit = $6.00 * (1 - 50%) = $3.00
Machine change: Increase the number of machines by 150%.
New number of machines = 2 + (150% of 2) = 5 machines

Labor productivity increase:

Old labor cost per day = $6,000.00
New labor cost per day = 40 staff members * 8 hours * $15.00 per hour = $4,800.00
Labor productivity increase = (Old labor cost per day - New labor cost per day) / Old labor cost per day *
100
Labor productivity increase = ($6,000.00 - $4,800.00) / $6,000.00 * 100 = 20.00%

Material productivity increase:

Old material cost per day = 20 units * $6.00 per unit = $120.00
New material cost per day = 20 units * $3.00 per unit = $60.00
Material productivity increase = (Old material cost per day - New material cost per day) / Old material cost
per day * 100
Material productivity increase = ($120.00 - $60.00) / $120.00 * 100 = 50.00%

OPTION 3:

Labor change: Raise working hours per day by 25%.

New working hours per day = 8 + (25% of 8) = 10 hours
Power change: Raise KWH used per machine by 10%.
New KWH used per machine = 200 + (10% of 200) = 220 KWH
Units produced change: Increase units produced per day by 70%.
New units produced per day = 20 + (70% of 20) = 34 units

Labor productivity increase:

Old labor cost per day = $6,000.00
New labor cost per day = 50 staff members * 10 hours * $15.00 per hour = $7,500.00
Labor productivity increase = (Old labor cost per day - New labor cost per day) / Old labor cost per day *
100
Labor productivity increase = ($6,000.00 - $7,500.00) / $6,000.00 * 100 = -25.00%

Power productivity increase:

Old power cost per day = $400.00
New power cost per day = 5 machines * 220 KWH * $1.00 per KWH = $1,100.00
Power productivity increase = (Old power cost per day - New power cost per day) / Old power cost per
day * 100
Power productivity increase = ($400.00 - $1,100.00) / $400.00 * 100 = -175.00%

Units produced productivity increase:

Old units produced per day = 20 units
New units produced per day = 34 units
Units produced productivity increase = (Old units produced per day - New units produced per day) / Old
units produced per day * 100
Units produced productivity increase = (20 - 34) / 20 * 100 = -40.00%

Based on the calculations, here are the productivity increases for each option:

Option 1:
Labor productivity increase: 37.60%
Power productivity increase: -100%
Overall productivity increase: Both factors changed

Option 2:
Labor productivity increase: 20.00%
Material productivity increase: 50.00%
Overall productivity increase: Labor and material factors changed

Option 3:
Labor productivity increase: -25.00%
Power productivity increase: -175.00%
Units produced productivity increase: -40.00%
Overall productivity increase: Both factors changed
Therefore, Option 2 provides the highest productivity increase in terms of labor (20.00%) and material
(50.00%) factors.

Table 1.6 Labor Productivity

Determine the best option based on the increase in labor productivity.

Item Current Option 1 Option 2 Option 3

Labor hours 400 312 320 500
Units/labor-hour .05 .0641 .0625 .018
Units 20 0 0 14
Percentage 28.2% 25% 36%
Best option Better Good Best

To determine the best option based on the increase in labor productivity, we need to calculate the labor-
hours per day and units per labor-hour for each option, as well as the increase or decrease from the
current labor productivity. Let's calculate these values:

Current labor-hours per day:

Current number of staff members = 50
Current working hours per day = 8
Current labor-hours per day = Current number of staff members * Current working hours per day = 50 * 8
= 400 labor-hours/day

Current units per labor-hour:

Current units produced per day = 20
Current units per labor-hour = Current units produced per day / Current labor-hours per day = 20 / 400 =
0.05 units/labor-hour

Now, let's calculate the values for each option:

Option 1:
New number of staff members = 39
New working hours per day = 8
New labor-hours per day = New number of staff members * New working hours per day = 39 * 8 = 312
labor-hours/day
Units per labor-hour for Option 1:
Units produced per day = 20
Units per labor-hour for Option 1 = Units produced per day / New labor-hours per day = 20 / 312 ≈ 0.0641
units/labor-hour

Increase or decrease from current units per labor-hour:

Increase or decrease from current, units = Units per labor-hour for Option 1 - Current units per labor-hour
= 0.0641 - 0.05 = 0.0141 units/labor-hour

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
labor-hour * 100 = (0.0141 / 0.05) * 100 ≈ 28.2%

Option 2:
New number of staff members = 40
New working hours per day = 8
New labor-hours per day = New number of staff members * New working hours per day = 40 * 8 = 320
labor-hours/day

Units per labor-hour for Option 2:

Units produced per day = 20
Units per labor-hour for Option 2 = Units produced per day / New labor-hours per day = 20 / 320 ≈ 0.0625
units/labor-hour

Increase or decrease from current units per labor-hour:

Increase or decrease from current, units = Units per labor-hour for Option 2 - Current units per labor-hour
= 0.0625 - 0.05 = 0.0125 units/labor-hour

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
labor-hour * 100 = (0.0125 / 0.05) * 100 = 25%

Option 3:
New number of staff members = 50
New working hours per day = 10
New labor-hours per day = New number of staff members * New working hours per day = 50 * 10 = 500
labor-hours/day
Units per labor-hour for Option 3:
Units produced per day = 34
Units per labor-hour for Option 3 = Units produced per day / New labor-hours per day = 34 / 500 = 0.068
units/labor-hour

Increase or decrease from current units per labor-hour:

Increase or decrease from current, units = Units per labor-hour for Option 3 - Current units per labor-hour
= 0.068 - 0.05 = 0.018 units/labor-hour

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
labor-hour * 100 = (0.018 / 0.05) * 100 = 36%

Based on the calculations, here are the increases in labor productivity for each option:

Option 1: 28.2% increase

Option 2: 25% increase
Option 3: 36% increase

Therefore, Option 3 provides the highest increase in labor productivity, with a 36% improvement from the
current labor productivity level.

Table 1.8 Multifactor Productivity (per Day)

Item Current Option 1 Option 2 Option 3
Labor cost/day $6,000.00 $3,744.00 $4,800.00 $7,500.00
Power cost/day $400.00 $800.00 $400.00 $1,100.00
Material cost/day $120.00 $120.00 $60.00 $120.00
Total cost/day $6,520.00 $4,664.00 $5,260.00 $8,720.00
Units 20 0 0 14
Percentage 38.71% 22.58% 25.81%
Best option Best Good Better

To determine the best option based on the increase in multifactor productivity, we need to calculate the
various costs and units per dollar for each option, as well as the increase or decrease from the current
multifactor productivity. Let's calculate these values:
Current labor cost per day:
Current labor-hours per day = 400 labor-hours/day
Current payroll cost per hour = $15.00
Current labor cost per day = Current labor-hours per day * Current payroll cost per hour = 400 * $15.00 =
$6,000.00

Current power cost per day:

Current KWH used per day = 2 machines * 200 KWH = 400 KWH/day
Current power cost per KWH = $1.00
Current power cost per day = Current KWH used per day * Current power cost per KWH = 400 * $1.00 =
$400.00

Current material cost per day:

Current units produced per day = 20 units
Current material cost per unit = $6.00
Current material cost per day = Current units produced per day * Current material cost per unit = 20 *
$6.00 = $120.00

Current total cost per day:

Current total cost per day = Current labor cost per day + Current power cost per day + Current material
cost per day
Current total cost per day = $6,000.00 + $400.00 + $120.00 = $6,520.00

Current units per dollar:

Current units per dollar = Current units produced per day / Current total cost per day = 20 / $6,520.00 ≈
0.0031 units/$

Now, let's calculate the values for each option:

Option 1:
New labor cost per day = $3,744.00 (calculated previously)
New power cost per day = 2 machines * 200 KWH * $2.00 per KWH = $800.00
New material cost per day = $120.00 (no change)
New total cost per day = New labor cost per day + New power cost per day + New material cost per day
New total cost per day = $3,744.00 + $800.00 + $120.00 = $4,664.00

Units per dollar for Option 1:

Units per dollar for Option 1 = Units produced per day / New total cost per day = 20 / $4,664.00 ≈ 0.0043
units/$

Increase or decrease from current units per dollar:

Increase or decrease from current, units = Units per dollar for Option 1 - Current units per dollar = 0.0043
- 0.0031 = 0.0012 units/$

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
dollar * 100 = (0.0012 / 0.0031) * 100 ≈ 38.71%

Option 2:
New labor cost per day = $4,800.00 (calculated previously)
New power cost per day = $400.00 (no change)
New material cost per day = 20 units * $3.00 per unit = $60.00
New total cost per day = New labor cost per day + New power cost per day + New material cost per day
New total cost per day = $4,800.00 + $400.00 + $60.00 = $5,260.00

Units per dollar for Option 2:

Units per dollar for Option 2 = Units produced per day / New total cost per day = 20 / $5,260.00 ≈ 0.0038
units/$

Increase or decrease from current units per dollar:

Increase or decrease from current, units = Units per dollar for Option 2 - Current units per dollar = 0.0038
- 0.0031 = 0.0007 units/$

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
dollar * 100 = (0.0007 / 0.0031) * 100 ≈ 22.58%

Option 3:
New labor cost per day = $7,500.00 (calculated previously)
New power cost per day = 5 machines * 220 KWH * $1.00 per KWH = $1,100.00
New material cost per day = $120.00 (no change)
New total cost per day = New labor cost per day + New power cost per day + New material cost per day
New total cost per day = $7,500.00 + $1,100.00 + $120.00 = $8,720.00
Units per dollar for Option 3:
Units per dollar for Option 3 = Units produced per day / New total cost per day = 34 / $8,720.00 ≈ 0.0039
units/$

Increase or decrease from current units per dollar:

Increase or decrease from current, units = Units per dollar for Option 3 - Current units per dollar = 0.0039
- 0.0031 = 0.0008 units/$

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
dollar * 100 = (0.0008 / 0.0031) * 100 ≈ 25.81%

Based on the calculations, here are the increases in multifactor productivity for each option:

Option 1: 38.71% increase

Option 2: 22.58% increase
Option 3: 25.81% increase

Therefore, Option 1 provides the highest increase in multifactor productivity, with a 38.71% improvement
from the current level.

Table 1.7 Power Productivity

Item Current Option 1 Option 2 Option 3

KWH used/day 400 KWH/day 400 KWH/day 600 KWH/day 440 KWH/day
Units/KWH .05 u/KWH .05 u/KWH .0333 u/KWH .0773 u/KWH
Units 20 0 0 14
Percentage 0% -33.3% 54.6%
Best Option NA Decrease Increase (Best)

To determine the best option based on the increase in power productivity, we need to calculate the KWH
used per day, units per KWH, and the increase or decrease from the current power productivity for each
option. Let's calculate these values:

Current KWH used per day:

Current number of machines = 2
Current KWH used per machine = 200 KWH
Current KWH used per day = Current number of machines * Current KWH used per machine = 2 * 200
KWH = 400 KWH/day

Current units per KWH:

Current units produced per day = 20 units
Current units per KWH = Current units produced per day / Current KWH used per day = 20 / 400 = 0.05
units/KWH

Now, let's calculate the values for each option:

Option 1:
New KWH used per day = 2 machines * 200 KWH = 400 KWH/day (no change)

Units per KWH for Option 1:

Units produced per day = 20
Units per KWH for Option 1 = Units produced per day / New KWH used per day = 20 / 400 = 0.05
units/KWH (no change)

Increase or decrease from current units per KWH:

Increase or decrease from current, units = Units per KWH for Option 1 - Current units per KWH = 0.05 -
0.05 = 0 units/KWH

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
KWH * 100 = (0 / 0.05) * 100 = 0%

Option 2:
New KWH used per day = 3 machines * 200 KWH = 600 KWH/day

Units per KWH for Option 2:

Units produced per day = 20
Units per KWH for Option 2 = Units produced per day / New KWH used per day = 20 / 600 ≈ 0.0333
units/KWH

Increase or decrease from current units per KWH:

Increase or decrease from current, units = Units per KWH for Option 2 - Current units per KWH = 0.0333 -
0.05 = -0.0167 units/KWH
Increase or decrease from current, %:
Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
KWH * 100 = (-0.0167 / 0.05) * 100 = -33.3%

Option 3:
New KWH used per day = 2 machines * (200 KWH * 1.1) = 440 KWH/day

Units per KWH for Option 3:

Units produced per day = 34
Units per KWH for Option 3 = Units produced per day / New KWH used per day = 34 / 440 ≈ 0.0773
units/KWH

Increase or decrease from current units per KWH:

Increase or decrease from current, units = Units per KWH for Option 3 - Current units per KWH = 0.0773 -
0.05 = 0.0273 units/KWH

Increase or decrease from current, %:

Increase or decrease from current, % = (Increase or decrease from current, units) / Current units per
KWH * 100 = (0.0273 / 0.05) * 100 = 54.6%

Based on the calculations, here are the increases in power productivity for each option:

Option 1: 0% change
Option 2: -33.3% decrease
Option 3: 54.6% increase

Therefore, Option 3 provides the highest increase in power productivity, with a 54.6% improvement from
the current power productivity level.