In Class Example $1$

Productivity Measurement Application problem

Dynamic Steels Manufacturing production operation is making $150$ pieces of ball valves by engaging $5$ workers for $300$ hours. However, $40\%$ of the units appear to have various quality problems and the company decides to sell them as seconds at the price of RM$50$ each when the normal unit is sold for RM$150$ each to the hardware vendors.

a$.$ What is the productivity of the company?

b$.$ In an effort to improve the situation, a number of initiatives were proposed, including a scheme where, for every improvement, $50\%$ will be given to workers and the other $50\%$ will be held by the company. This results in a significant drop in defects as now only $10$ units were faulty out of production units of $130$ valves. Determine:

i$.$ The new productivity of the company.

ii$.$ What will be the earnings per hour of the workers under the bonus scheme if the cost per unit is RM$70$ both before and after the scheme?