The latest data indicates that Omega Industries produces 16,000 computer hard drives per day. The 24 workers work from 7:00 a.m. until 4:00 p.m., with 30 minutes off for lunch and a 15-minute break during the morning work session and another in the afternoon work session. Since this is a very competitive industry, productivity must always improve to stay competitive. The CEO believes that a 35% increase is needed.
The operations management team believes that the 35% increase will not be possible without a multifaceted improvement program. In order to begin the improvement program, management has decided to change the work schedule. The new schedule calls for workers to work from 7:30 a.m. until 4:30 p.m., during which they can take one hour off at any time of their choosing. The number of paid hours is the same as before, but production does increase. Perhaps because workers are being given some positive attention, as indicated by the Hawthorne studies years ago, after this change, production increased to 18,500 units per day.
• Calculate labor productivity for the initial situation.
• Calculate labor productivity for the hypothetical 35% increase.
• What is the productivity after the change in work time?
• Assess these results achieved in a short narrative.