1.

A catering company prepared and served 300 meals at an anniversary celebration last
week using eight workers. The week before, six workers prepared and served 240 meals
at a wedding reception.
(a) For which event was the labor productivity higher? Explain.
Productivity is the ratio of a process's entire output to its total inputs. The evolution of
this ratio over time, which is used to calculate labor productivity growth, serves as a
metric of work productivity. Workers can now create more goods and services in the
same amount of time as before because of increased labor productivity. Hence, The
labor productivity for the second event (wedding reception) is high as it can wake more
meals with fewer workers as compared to the first event.
● Labor Productivity of the workers for the primary event:
Meals served were 300.
The number who worked was 8
Therefore, Productivity would be like 300 / 8 = 37.5
Therefore, Productivity would be like 37.5 meals per worker.
● Labor Productivity for the second event:
Meals served were 240
The number who worked was 6
Therefore, Productivity would be like 240 / 6 = 40
Therefore, Productivity would be like 40meals per worker.

(b) What are some possible reasons for the productivity differences?
Any factor could be to blame for the difference in productivity. Differences between the
two groups of workers' degrees of efficiency. The second group of workers should
receive greater training, and there should be less waste on their part, to explain why the
efficiency levels may differ.
2. The manager of a crew that installs carpeting has tracked the crew’s output over the past
several weeks, obtaining these figures:

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

Formula: Labor Productivity = Yards installed / Crew Size

WEEK CREW SIZE YARDS INSTALLED PRODUCTIVITY

1 4 96 24

2 3 72 24

3 4 92 23

4 2 50 25

5 3 69 23

6 2 52 26

By looking at the productivity that is calculated in the given table it shows that,
productivity is highest (26 and 25) when the crew size was the lowest that is 2.
Therefore, the smaller the crew size, the higher the productivity.
3. Compute the multifactor productivity measure for each of the weeks shown for the
production of chocolate bars. What do the productivity figures suggest? Assume
40-hour weeks and an hourly wage of $12. Overhead is 1.5 times the weekly labor cost.
The material cost is $6 per pound.

Week 1
● Hourly wages × Work Hours × Number of workers = Labor Cost
● 12 × 40 × 6 = 2,880
● Labor cost × Rate of Overhead = Overhead Cost
● 2,880 × 1.5 = 4,320
● Material × Cost per pound = Material Cost
● 450 × 6 = 2,700
● Multifactor productivity = Total Output / Total Input
● 30,000 / ( 2,880 + 4,320 + 2,700) = 3.03 units per dollar

Week 2
● Hourly wages × Work Hours × Number of workers = Labor Cost
● 12 × 40 × 7 = 3,360
● Labor cost × Rate of Overhead = Overhead Cost
● 3,360 × 1.5 = 5.040
● Material × Cost per pound = Material Cost
● 470 × 6 = 2,820
● Multifactor productivity = Total Output / Total Input
● 33,600 / (3,360 +2,820 + 5,040) = 2.99 units per dollar
Week 3
● Hourly wages × Work Hours × Number of workers = Labor Cost
● 12 × 40 × 7 = 3,360
● Labor cost × Rate of Overhead = Overhead Cost
● 3,360 ×1.5 = 5,040
● Material × Cost per pound = Material Cost
● 460 × 6 = 2,760
● Multifactor productivity = Total Output / Total Input
● 32,200 / (3,360 +2,760 + 5,040) = 2.88 units per dollar

Week 4
● Hourly wages × Work Hours × Number of workers = Labor Cost
● 12 × 40 × 8 = 3,840
● Labor cost × Rate of Overhead = Overhead Cost
● 3,840 × 1.5 = 5,760
● Material × Cost per pound = Material Cost
● 480 × 6 = 2,880
● Multifactor productivity = Total Output / Total Input
● 35,400 / (3,840 +2,880 + 5,760) = 2.84 Units per dollar

The multifactor productivity suggests that the multifactor productivity reduces gradually
each week from 3.03 to 2.84.
4. A company that makes shopping carts for supermarkets and other stores recently purchased
some new equipment that reduces the labor content of 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 the machine costs $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 labor productivity.

Old System
Labor Productivity = Number of carts produced per hour / Number of workers
Labor Productivity = 80 / 5
Labor Productivity = 16 carts per worker per hour

New System
Labor Productivity = Number of carts produced per hour / Number of workers
Labor Productivity = 84 / 4
Labor Productivity = 21 carts per worker per hour
b. Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus
equipment) as the measure.

Multifactor Productivity = Carts produced / (Number of workers × Worker wage) + Equipment

cost
Multifactor Productivity = 80 / (5 × 10) + 40
Multifactor Productivity = 80 / (50 + 40)
Multifactor Productivity = 80 / 90
Multifactor Productivity = 0.89 carts per dollar cost

Multifactor Productivity = Carts produced / (Number of workers × Worker wage) + Equipment

cost
Multifactor Productivity = 84 / (4 × 10) + 50
Multifactor Productivity = 84 / (40 + 50)
Multifactor Productivity = 84 / 90
Multifactor Productivity = 0.93 carts per dollar cost
c. Comment on the changes in productivity according to the two measures, and on which one
you believe is the more pertinent for this situation.

Increased Productivity (Labor):

Increased Productivity = New productivity − Old productivity / Old productivity × 100
Increased Productivity = (21 − 16) / 16 × 100
Increased Productivity = 5 / 16 × 100
Increased Productivity = 0.3125 × 100
Increased Productivity = 31.25%

Increased Productivity (Multifactor):

Increased Productivity = New productivity − Old productivity / Old productivity × 100
Increased Productivity = (0.93 − 0.88) / 0.88 × 100
Increased Productivity = 0.05 / 0.88 × 100
Increased Productivity = 0.056 × 100
Increased Productivity = 5.6%

Therefore, a new system is more relevant to the situation for the given problem, as it increases
the labor and productivity of the machine with less number of the workers.
5. An operation has a 10 percent scrap rate. As a result, 72 pieces per hour are produced. What
is the potential increase in labor productivity that could be achieved by eliminating the
scrap?

90% (Production + Scrap) = 72

(0.90) (72 + Scrap) = 72
72 + Scrap= 80
Scrap = 8

Potential increase in labor productivity = Required excess production / Previous production level
× 100
= 8 units / 72 units × 100
= 0.1111 × 100
= 11.11%

Therefore, by removing scrap, labor productivity can be increased by 11.11%.