Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,200 tires per day with the following resources
Labor: 425 hours per day @ $12.50 per hour
Raw Material: 20,000 pounds per day @ $1.00 per pound
Energy: $5,000 per day
Capital: $10,250 per day
a) Labor productivity per labor hour for these tires2.82 tires/labor hour (round your response to two decimal places)
b) Multifactor productivity for these tires0296 tires/dollar (round your response to four decimal places)
c) The percent change in multifactor productivity if Fok can reduce the energy bill by $950 per day without cutting production or changing any other inputs = _______ ( enter your response as a percentage rounded to two decimal places. )
Note: calculate the new multifactor productivity to four decimal places before calculating the percentage change.
a)
labour productivity = Output/labour hours = 1200/425 = 2.823529412 = 2.82 (Rounded to 2 decimal places)
b)
Per day
Total labour = 425*12.5
Total raw material = 20000*1
Energy = 5000
Capital = 10250
Multifactor productivity = 1200/(425*12.5+20000*1+5000+10250) = 0.029583975 = 0.0296 (Rounded to 4 decimal places)
c)
Reduced energy bill per day = 5000-950 = 4050
So, New Multifactor productivity = 1200/(425*12.5+20000*1+4050+10250) = 0.030293468 = 0.0303 (Rounded to 4 decimal places)
% change = ((0.0303 - 0.0296)/0.0296)*100 = 2.364864865 = 2.36% (Rounded to 2 decimal places)
Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,200 tires per day with the following resources
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