Tomas Zelinski, a Polish road cyclist, immigrated to Canada after his racing career ended. Tomas makes wooden boxes in which to ship high end racing bikes. Tomas and his 3 employees invest a total of 40 hours per day making the 120 boxes.
1) What is the productivity?
John and his employees have discussed redesigning the process to improve efficiency.
2) If they can increase the rate to 125 per day, what will their new productivity be?
3) What will their unit increase in productivity be per hour? 4) What will the percentage change in productivity be?
The question makes reference to one input and that is labor.
1) Tomas and his three employees spend 40 hours per day to make 120 boxes. The output is represented by the 120 boxes.
Therefore, productivity is measured using the output (120 boxes) divided by the input (40 hours) = 3 boxes per hour.
P=120/40 = 3 boxes p/h.
2) Productivity is a measure of output not efficiency and so we will use the same process to establish the productivity according to the boxes now produced. The output is now 125 boxes. Therefore, 125 boxes divided by 40 hours = 3.125 boxes per hour.
P= 125/40=3.125 boxes p/h.
3) The unit increase in productivity will be the new hourly rate of boxes produced (3.125) less the original boxes produced hourly (3) divided by the original 3 boxes produced
Therefore, the unit increase in productivity is (3.125-3)/3= 0.042 or 0.0417 (rounded off) units.
4) The percentage change in productivity will be 4.17%.