Problem:
You’ve been assigned the responsibility by ANZ bank to performing a study on impact of implementation of a quality improvement project on productivity. Tickets are processed by computer in the loans department. Prior to the execution of the project, the number of tickets processed during a month was 6259. The labour hours for month were 810 at a cost of Rs 150 per hour. Systems and computer run time has been allocated a fixed rate of Rs 4000 per month. Each form costs Rs 0.86. In order to process 6259 tickets, 7000 forms were used. After the execution of the quality enhancement project, data were again gathered. It was found that 7200 tickets were processed using 7200 forms. Amount of labour time reduced and amounted to 750 hours for the month. The base costs didn’t change.
Required:
Question 1: Illustrate out the utility of base costs in the computation of productivity index.
Question 2: By performing appropriate calculations, determine whether the quality enhancement project has led to an enhancement in productivity.