Tom's guitar factory produces low-cost, highly durable guitars for beginners. Out of the 100 guitars made each month, only 80 percent are considered good enough to sell.The other 20 percent are scrapped.Each guitar sells for $250.Employees work 160 hours per month and are paid $10 per hour. The material cost for each guitar is $40 and the monthly overhead is $4,000.

What is the productivity of Tom's operation?

Tom is considering 1) raising the sales price by 10 percent OR 2) improving quality so only 10 percent are scrapped. What should he do & why?