Question

María owns a nearby pizzeria in the town of Caguas, which has operated for the past five years. She has noticed that operational costs are getting higher. For this reason, he decided to make some changes in the business with the intention of increasing productivity and thus be more efficient. First, he acquired a new mixer to make the dough and then reorganized the kitchen area. Below are the results of the last two years:

	Year 2015	Year 2016
Dozens of pizzas produced	1,150	1,150
Labor (hours)	325	315
Invested capital (dollars)	8,000	10,000
Flour (pounds)	1,800	1,800
Energy (BTU)	2,750	2,225

Answer the following Questions:

1. Calculate the productivity of each category and present the percentage change.
2. Explains the result of productivity in the category of capital invested.
3. Do you consider that Maria's changes were effective? Explain.

Answer 1

Productivity Percentage change Year 2015 Year 2016 Year 2015 Year 2016 Dozens of pizzas produced Labor (hours Invested capital (dollars Flour (pounds) Energy (BTU 1150 325 8000 1800 2750 1150 315 10000 1800 2225 SC$3/C4 SC$3/C5 SC$3/C6 SC$3/C7 -(E4-D4)/D4 E5-D5)/D5 -(E6-D6)/D6 (E7-D7)/D7 -SB$3/B4 -SB$3/B6 SB$3/B7

Productivity Percentage Year 2015 Year 2016 Year 2015 Year 2016 change 3 Dozens of pizzas produced 4 1,1501,150 Labor (hours 325 315 3.538 3.651 5 Invested capital (dollars)8,000 10,000 0.144 0.115 0.639 0.517 3.2% 20.0% 0.0% 23.6% Flour (pourn Energy (BTU) 1,800 2,750 1,800 2,225 0.639 0.418

Percentage change in productivity in terms of capital invested is negative. This means more capital is being invested for a pizza in 2016 than that is 2015.

Maria's changes were effective with respect to labor productivity and energy productivity.