An air conditioner factory makes three different types of air conditioners: the ceiling type, the cassette type, and the wall-mounted type. Weekly sales of each type are 2, 4, and 6 units at a price of €350, €450, and €500 each, respectively. The ceiling type can be assembled in 1.5 hours, the cassette type in 1 hour, and the wall-mounted type in 45 minutes. Labor cost is €40 per hour and the current factory’s multifactor productivity is 2.2.
a) Calculate the average cost per air conditioner based on current multifactor productivity.
b) Calculate labor productivity (in euros per hour) for each type of air conditioner.
c) Where should the company focus its efforts based on (i) Labor productivity, and (ii) Average cost?