Problem of productivity

1. A company that makes shopping carts for supermarkets and other stores
recently purchased some new equipment that reduces the labor contents
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 machine cost was
$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.

b. Compute the overall productivity under each system.
c. Comments on the changes in productivity according to the two measures.
Which one you believe is the more relevant for this situation.

2. A cable manufacturing company produces two types of cables from same

raw materials; wire and plastic resins. To produce one meter first type
cable 200 gm resin and 1.5 kg wire are required. Whereas, 300 gm resin
and 2.5 kg wire are required to produce one meter of the second type
cable. Cost of resin and wire is Tk.60/Kg and Tk.200/Kg respectively. The
company can produce 60000 meter first type and 30000 meter second
type cable per month by using 30 labors. Labors receive Tk.150 per day
per labor, and overhead cost is Tk.10000 per day. To set up the machine
Tk.60000000 is invested on it. Life of the machine is 10 years. Price of the
first and second type cable is Tk.500/meter and Tk.700/meter
respectively. Consider 25 working days make a month.

a) Compute labor, material, machine, overhead and multi factor

productivity.
b) If production time for every meter of second type cable is double to
that of first type cable then compute overall productivity of 1st and
2nd type of the cables.

3. A company produces two types of measuring devices. Price of per unit of

the 1st and 2nd type of the device is $10 and & $12 respectively. Material
cost to produce the devices is 40% of their prices. The company used ten
workers, who can produce an average of 30 and 50 devices of 1st and 2nd
types per day. Workers receive $10 per day and machine and overhead
cost is $120 and $100 per day respectively.

a. Compute labor, material, machine and overhead productivity.

b. Compute the overall productivity.
c. If production time of each 2nd type device is 25% more than that of 1st
type then compute overall productivity of 1st and 2nd types of the
product.