Question 1

A manager has just replaced three workers with a machine that is cheaper to operate than the cost of the three replaced workers. Output is expected to remain the same. Which of the following is true?

Accepted Answer

Multifactor productivity will increase because the same output is now being produced with less labor cost, assuming other factors remain constant. This indicates an improvement in the efficiency of how all inputs (labor, capital, etc.) are used.

Question 2

Suppose that in year 1 a company produced $100 Million worth of outputs while inputs totaled $50 Million. For which of the following values in year 2 would productivity decrease?

Accepted Answer

Calculate the P= O/I for each;
90 / 50 = 1.8
a is the only one less than Year 2.

Question 3

Johnny employs five painters. He collected the following data from last week.

Which painter was least productive last week?

Accepted Answer

Calculate by dividing walls completed by the hours; a is the lowest and least productive
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Question 4

Vericol, Inc. manufactures drugs using workers and automated machines. The firm has decided to replace two workers with a new machine, while the output per day is not expected to change. Which of the following cannot be true?

Accepted Answer

Labor productivity is defined as output per worker, and if the output per day is not expected to change, then labor productivity will remain the same. However, since two workers are being replaced with a machine, the labor input will decrease, so the labor productivity will actually increase. Machine productivity, on the other hand, may decrease or remain the same, depending on the efficiency and reliability of the new machine compared to the previous workers. Multifactor productivity, which takes into account all inputs (including labor and machines), will increase if the output per day remains the same while the labor input decreases. Therefore, the only statement that cannot be true is C: labor productivity will decrease.

Question 5

A firm produces 100 units using 800 labor hours. What is its labor productivity?

Accepted Answer

100 / 800 = .125 units / hr

Question 6

A machine shop produces metal frames on two different machines. The average daily production on machine 1 is 300 frames, and the average daily production on machine 2 is 180 frames. What is the daily machine productivity?

Accepted Answer

300 + 180 = 480 
480 / 2 = 240 frames/machines

Question 7

Suppose that weekly output is worth $1000, and labor and materials costs are $300 and $200, respectively. What is the multifactor productivity ratio?

Accepted Answer

1000 / 300 + 200 = 1000 / 500 = 2

Question 8

A firm produces 500 units per day using five workers on a five-hour shift. On average, 15% of the units produced are defective and must be scrapped. What is the labor productivity for non-defective units?

Accepted Answer

500 per day - 15% or 75 = 425 per day
425 / 5 workers = 85 85 / 5 hr = 17 units / hr

Question 9

A firm uses five plants to produce its products. Output value and total input cost for last week are provided below.

Which plant was least productive last week?

Accepted Answer

Plant 1 = 20000/25000 = .800
Plant 2 = 50000/60000 = .833
Plant 3 = 40000/42000 = .952
Plant 4 = 80000/99000 = .808
Plant 5 = 25000/29000 = .862

Question 10

A machine shop produces metal brackets on two different machines. Machine 1 can produce a bracket every 10 minutes. Machine 2 can produce a bracket every 4 minutes. What is the average productivity per machine?

Accepted Answer

Machine 1 > 6 [6x10=1 hr]
Machine 2 > 15[4x15=1 hr]
6 + 15 = 21
= 21 / 2
= 10.5 brackets/hr

Question 11

A bakery uses five ovens to bake muffins. Yesterday's data are provided below.

Which oven was the most productive?

Accepted Answer

Calculate by dividing muffins baked by the hours; c is the highest and most productive
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Question 12

A bakery bakes bread in two different ovens. Oven 1 can bake a loaf every 30 minutes. Oven 2 can bake a loaf every 15 minutes. What is the average productivity per oven?

Accepted Answer

Oven 1 can bake 2 per hour
Oven 2 can bake 4 per hour
Total 6 loaves per hr / 2 ovens = 3 loaves per hour

Question 13

A firm uses five plants to produce its products. Each final product has a value of $100. The following table provides last week's output, labor hours used (at $15 per hour), and materials cost per unit.

Which plant was most productive last week?

Accepted Answer

Plant 1 = 2000/(400x15) + (20x2000) = .043
Plant 2 = 5000/(900x15) + (18x2000) = .048
Plant 3 = 9000/(2000x15) + (20x2000) = .042
Plant 4 = 1000/(150x15) + (30x2000) = .031
Plant 5 = 2000/(440x15) + (18x2000) = .047

Question 14

The state government utilizes five workers to stamp license plates. Last month's data are provided below.

Which worker was the least productive?

Accepted Answer

Calculate by dividing units stamped by the days; e is the lowest and least productive
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Question 15

Suppose that on Thursday a company produced 80 units using 160 labor hours. For which of the following values on Friday would daily labor productivity increase?

Accepted Answer

Calculate the P= O/I for each; d is the only one more than Thursday. 160 / 300 = .5333

Question 16

Suppose that in January a company produced 5000 units using 1000 labor hours. For which of the following values in February would labor productivity decrease?

Accepted Answer

Calculate the P= O/I for each; e is the only one less than January. 5000 / 1100 = 4.54

Question 17

Suppose that output is worth $400, and labor and materials costs are $200 and $100, respectively. What is the materials productivity?

Accepted Answer

400 / 100 = 4.00

Question 18

Each day a firm produces 50 products worth $40 each. Raw materials cost per unit are $12. The firm uses 4 workers on an eight-hour shift earning $10 per hour each. What is the multifactor productivity ratio?

Accepted Answer

50 x $40 = 2000
600 [12x50] + 320 = 920
2000 / 920 = 2.17

Question 19

If the telecommunication company sold $10,000,000 of internet service using $50,000 of labor, $25,000 of leased bandwidth, $45,000 service fees, and $80,000 or replacement parts, what is the telecommunication multifactor productivity?

Accepted Answer

10,000,000 / 50k + 25k + 45k + 80k = 10,000,000 / 200k = 50

Question 20

A firm produces handbags using three workers. On Tuesday, Jane completed 60 bags in 6 hours, Ron completed 50 bags in 7 hours, and Mary completed 80 bags in 5 hours. What was the overall productivity of the firm?

Accepted Answer

Jane 60 bags 6 hrs
Ron 50 bags 7 hrs
Mary 80 bags 5 hrs
Total - 190 bags 18 hrs
190 / 18 = 10.56 bags/hr

Quiz 2: Operations Strategy and Competitiveness