Example $1\mathrm{.}6$ Multi$-$Factor Productivity

The Krusty Krab, the Pacific Ocean$$s premier fast$-$food restaurant, serves $1,500$ Krabby Patties

per month. The kitchen has a labor productivity of $2\mathrm{.}344$ Krabby Patties per labor hour and each

employee works $160$ hours per month.

$1.$ How many kitchen employees does the Krusty Krab currently have?

$2.$ If each employee makes $$8$ per hour $($while a sovereign city$-$state, Bikini Bottom trades on

U$.$S$.$ currency$),$ what is the current productivity in Krabby Patties per dollar?

$3.$ Because of its excellent quality and location, demand at the Krusty Krab has increased by

$25\%$ in the last year. Due to the historic nature of the building, expansions and additions

are not possible. Instead, an employee suggested a way of arranging the grills differently

so that more Krabby Patties can be cooked at one time. This will require extra labor in the

kitchen. Assuming the productivity level stays the same and no other part of the process

changes, how many more employees will Mr$.$ Krabs have to hire to meet the increased

demand?

BUAD $306$ Week $1$ Intro to OM

$4.$ If Mr$.$ Krabs does hire a fifth employee, what is the new labor productivity in Krabby

Patties per dollar? How has productivity changed $($from question $2)?$

$5.$ Mr$.$ Krabs later attends the annual Trans$-$Oceanic Fast$-$Food Conference and learns about

a secret tool $($the hydro$-$dynamic spatula$)$ that can help the Krusty Krab meet the $25\%$

increase in demand without hiring anyone new. However, this will mean an increase of

$$100$ per month in costs. What would be the productivity in Krabby Patties per dollar?

$6.$ If Mr$.$ Krabs opts to go down the hydro$-$dynamic spatula route, how has productivity

changed $($from question $2)?$

$7.$ What option should Mr$.$ Krabs choose to maximize productivity?