ANALYZE AND SOLVE EACH PROBLEMS ON PRODUCTIVITY MEASUREMENT AND MAKE AN INTERPRETATION ON THE RESULT OF PRODUCTIVITY IMPROVEMENT (10 PTS EACH) 1. At Modern Lumber Inc., Art Binley, president and producer of apple crates sold to growers, has been able with his current equipment to produce 240 crates per 100 logs. He currently purchases 100 logs per day and each log requires 3 labor hours to process. He believes that he can hire a professional buyer who can buy a better quality log at the same cost. If this is the case, he can increase his production to 250 crates per 100 logs. His labor hours will increase by 8 hours per day. What will be the impact on productivity (measurement in crates per labor hour) if the buyer is hired? 2. Art Binley has decided to look at his productivity from a multifactor (total factor productivity) perspective. To do so, he has determined his labor, capital, energy, and material usage and decided to use clars as the common denominator. His total labor-hours are now 300 per day and will increase to 308 per day. His capital and energy costs will remain constant at $350 and $150 per day, respectively. Material costs for the 100 logs per day are $1,000 and will remain the same. Because he pays an average of $10 per hour (with fringes), determine what is his current productivity and productivity with the proposed system? 3. A hamburger factory produces 50,000 burgers each week. The equipment costs $5,000 and will remain productive for three years. The annual labor cost is $8,000. a) What is the productivity as measured in units of output per dollar of input over a 3 years period? b) Management has the option of $10,000 equipment, with an operating life of five years. It would reduce labor costs to $4,000 per year. Should management purchase this equipment (using productivity arguments alone)? 4. Eastco has generated productivity data for the first two quarters of the year (Table 1). Using dollar measures of input and output, compare the total profit and productivity achieved for the first two quarters. How does a productivity compare with Q1 productivity? Use partial factor productivity to identify what might be done to improve productivity and profitability during 23. Table 1: FC Otely Productivity Data www 00 SEN