Answer:
Output = 600 claims
Input = (18*6*40) + 1200 = $5520
Cost per application = $9.2 is the cost per claim
Productivity ratio = 600 / 5520 = 0.1086
Explanation:
The productivity of the application process = total weekly cost incurred / weekly application output
Here we have average output of 600 application per week
And cost we have,
Total cost = weekly staff cost + weekly cost on computer technology
Weekly staff cost = 40 hours * 6 staff * $18 per hour rate = $ 4,320
Weekly cost on computer technology = $ 1200
Total cost = $4320 + $ 1200 = $5,520
Now productivity = $ 5,520 / 600 application = $ 9.2
Or we can say that it takes $ 9.2 to process one application
(b) Here we have average output of 650 application per week
And cost we have,
Total cost = weekly staff cost + weekly cost on computer technology
Weekly staff cost = 40 hours * 5 staff * $18 per hour rate = $ 3,600 ( assumed that one staff is reduced as one application evaluator is retiring and not replaced)
weekly cost on computer technology = $ 1800
Total cost = $3,600 + $ 1800 = $5,400
Now productivity = $ 5,400 / 650 application = $ 8.31
Or we can say that it takes $ 8.31 to process one application
Percentage change in productivity ={ ($8.31 – $ 9.2 )/ $ 8.31 } * 100 = - 10.71%
Means that the cost has reduced by 10.71 % by the new process
