1.

5 He would like to know if his organization is maintaining the manufacturing

average of 3% increase in productivity per year ? He has the following data,
reperesenting a month from year and an equivalent month this year:
Units produced
Labor (hours)
Resin (pounds)
Capital invested
($)
Energy (BTU)

Last year
1,000
300
50
10,000

now
1,000
275
45
11,000

3000

2850

Show the productivity percentage change for each category and them determine
the improvement for labor-hours, the typical standard for comparison.
Units Produced: (now-last year)/last year
(1000-1000) / 1000 = 0 = 0%
There is no change in the units produced.
Labor: (275-300)/300 = -0.083 = (8.3%) The labor hours has reduced 8.3%.
Resin: (45-50)/50 = -0.1 = (10%)
The use of resin has reduced 10%. (now-last)/last
Capital: (11,000-10,000)/10,000 = 0.1 = 10%
The capital has increased 10%.
Energy: (2,850-3,000)/3,000 = -0.05 = (5%)
The use of energy has reduced 5%.
Last year labor productivity: 1000/300 = 3.33 units / labor hour
Current year labor productivity: 1000/275 = 3.64 units / labor hour
% pchange in productivity: (3.64 units -3.33 units)/3.33 units = 0.093= 9.3%
The productivity increased 9.3% So eric can manage well and get maintained
average 3%

1.15 A furniture manufacturing company working on a 40 hour per

week basis make 100 chairs. The sales price is $70 each, and the
company has the following costs:
Direct materials: $700
Direct labor: $300
Overhead: $500

A) calculate the productivity of the company.

Productivity: outputs/inputs
100/40 hours: 2.5 chairs/hours
b) what will be the new productivity if the company decides to make
135 chairs?
135 chairs/40 hours =3.375 chairs/hours
C) if the company decides to improve productivity through materials
cost reduction only, how much these cost must be reduced I order to
achieve a 10 percent increase in total productivity?
100/700= 0.14/14%
d) if the company repeat the same exercise as in above, but through
labour costs reduction , how much these cost must be reduced in order
to achieve a 10 percent increase in total productivity?
100/300= 0.33%