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:

Last year now

Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 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%