Productivity Challenge: Closing a Facility
LatestFashion, Inc. has garment production facilities in several locations around the globe.
The average monthly cost of inputs (in US dollars) and output levels (in units) for each of these production facilities are given in the table.
| Guangzhou |
Ha Long Bay |
Pathum Thani |
Bangalore |
| Finished good (units) |
15,000 |
11,000 |
5,000 |
8,000 |
| Labor costs |
10,000 |
12,000 |
7,000 |
8,000 |
| Material costs |
45,000 |
50,000 |
60,000 |
64,000 |
| Energy costs |
7,000 |
9,000 |
10,000 |
5,000 |
| Transportation costs |
5,000 |
7,500 |
11,000 |
6,000 |
| Overhead costs |
4,000 |
5,500 |
8,000 |
6,500 |
a. Compute the partial productivity for each factor for each facility
b. Compute the multifactor productivity for each facility
c. If the company decides to close one of these facilities, which one would you recommend based on your analysis of productivity?
Productivity Challenge: Factors to Monitor Closely
Mark Moires makes golf balls in is Madison, NJ plant. He wants to improve the overall productivity of his company given the increases in the cost of inputs in recent years. He has the following data on the inputs and outputs from two sample years:
| 2015 |
2016 |
| Number of units produced |
10,000 |
11,000 |
| Labor hours used |
3,000 |
2,900 |
| Machine hours used |
1,000 |
1,200 |
| Materials used (pounds) |
500 |
450 |
| Energy (BTU) |
40,000 |
29,000 |
Determine the changes in productivity for each category of input, and determine which
category of inputs shows the most improvement. Which one was the worst?