A company has two manufacturing plants: one in Canada, and another overseas. Both produce the same product.

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A company has two manufacturing plants: one in Canada, and another overseas. Both produce the same product. However, their labour productivity figures are quite different. The analyst thinks that this is because the Canadian plant uses more automated equipment for production while the overseas plant uses a higher percentage of labour. Explain how that factor can cause labour productivity measures to be misleading. Is there another way to compare the two plants that would be more meaningful?

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Operations Management

ISBN: 9781259270154

6th Canadian Edition

Authors: William J Stevenson, Mehran Hojati, James Cao

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