Answer:
Multifactor productivity MFP before buying new equipment = 0.7549 carts/dollar cost
Growth in productivity between the Prior and after buying the new equipment. = 31.49%
Explanation:
Given that:
the number of workers before buying new equipment = 5
average cart production per hour = 77
worker's wage = $11
Cost of the machine = $47
After buying the new equipment;
number of worker is now = 4 since it is possible to transfer one of their worker to another department
average cart production per hour = $(77 +4) = $81
worker's wage = $11
Cost of the machine = $(47+14) = $61
The objective of this question is to "
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment.
Multifactor productivity MFP= Carts produced / (Labor cost + Equipment cost)
where;
Labor Cost = (Number of workers × Worker wage)
Multifactor productivity MFP = Carts produced / ((Number of workers × Worker wage) + Equipment cost)
We are to find just only the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment.
i.e before buying the new equipment.
Multifactor productivity MFP = 77/ (5 × 11) + 47)
Multifactor productivity MFP = 77/ (55+ 47)
Multifactor productivity MFP = 77/ (102)
Multifactor productivity MFP = 77/ (102)
Multifactor productivity MFP = 0.7549 carts/dollar cost
b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places
Growth in productivity = (Labor New productivity - Labor Old productivity) / Labor Old productivity] × 100
where;
Labor Productivity = Number of carts produced per hour / Number of workers
Labor Productivity (before buying new equipment) = 77/5
Labor Productivity (before buying new equipment) = 15.4 carts/worker/hour
Labor Productivity ( after buying the new equipment) = 81/4
Labor Productivity ( after buying the new equipment) = 20.25 carts/worker/hour
Growth in productivity = (20.25 - 15.40 /15.40) × 100
Growth in productivity = (4.85 / 15.40 )× 100
Growth in productivity = 0.3149 × 100
Growth in productivity = 31.49%
