Problem 2-4 A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor…

Problem 2-4

A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 6 workers, who together produced an average of 80 carts per hour. Workers receive $15 per hour, and machine cost was $50 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $12 per hour while output increased by 5 carts per hour.

a.Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity. 

  Before ________ carts per worker per hour  

After ____________ carts per worker per hour   

b.Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure. 

  Before __________ carts/dollar cost  

After  __________carts/dollar cost    

c. Comment on the changes in productivity according to the two measures.

  Labor productivity

A-decreased- by how much %

B-increased- by how much %

Multifactor productivity(Click to select)

A-decreased- by how much %

B- increased- by how much %

rev: 11_18_2014_QC_59418, 02_05_2015_QC_CS-1753