Estimating the multifactor productivity


Airphone Inc, manufactures cellular telephones at a processing cost of $47 per unit. The company produces an average of 250 phones per week although there are 16% defective phones. Each phone takes one hour to make. At this time, none of the defective phones can be reworked but can be sold as is. Each good phone is sold for $125. The defective phones are sold for parts that provides $10 in revenues per phone.

a. What is the company's labor hours productivity and what is its multifactor productivity?

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Operation Management: Estimating the multifactor productivity
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