Productivity Question: Determine the productivity for the following Years, Note labor costs per hour is $20.00. Selling price of finished output is $10/unit.
|
Year
|
Labor (hours)
|
Material costs
|
Output (units)
|
Productivity
|
|
2014
|
2000
|
$5,000
|
5,000
|
|
|
2015
|
2100
|
$6,300
|
7,000
|
|
|
2016
|
2300
|
$6,400
|
7,500
|
|
a) What are your observations based on the data above regarding the change in productivity?
b) If you had to forecast your estimate for productivity for the year 2017, what would you estimate (hint: look at last several years) and why? In addition, if expected demand to be 8,000 units for 2016 and management plans not to produce at forecasted demand, what would you plan for labor (input) hours for 2017?
Be clear, use numbers to make your point not just general statements.