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Sample Solution of Productivity Problem

The multifactor productivity is calculated for 5 weeks by taking the ratio of total output value to total input costs which includes labor, overhead and material costs. The productivity growth from week 2 to week 5 is calculated to be a decrease of 34.53%. The process yield for week -4 is calculated to be 4.38 units per tk input after accounting for a 15% scrap rate.

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140 views2 pages

Sample Solution of Productivity Problem

The multifactor productivity is calculated for 5 weeks by taking the ratio of total output value to total input costs which includes labor, overhead and material costs. The productivity growth from week 2 to week 5 is calculated to be a decrease of 34.53%. The process yield for week -4 is calculated to be 4.38 units per tk input after accounting for a 15% scrap rate.

Uploaded by

syed emon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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SAMPLE SOLUTION OF PRODUCTIVITY PROBLEM

Compute the multifactor productivity measure for each of the weeks shown. Standard price is Tk. 140 per
unit, Assume 40 hours per weeks and an hourly wage Tk. 15. Overhead cost is 1.5 times to total weekly
labor cost. Material cost is Tk. 6 per kg. Also compute the productivity growth for week 5 in compare with
week 2. Scrap rate is 15%. Find the process yield for week -4.

Output Worker Materials Output Input Productivity


Week
(Units) (Units) (Kg) (Tk.) (Tk.) (Tk./Tk.)

1 400 6 55 56000 9330 6

2 438 7 56 61320 10836 5.66

3 322 8 56 45080 12336 3.65

4 454 8 58 63560 12348 5.15

5 360 9 57 50400 13842 3.64

Solution:

Multifactor Productivity (MFP) of week - 1:

MFP=
output 400∗140 56000
= = =6.0 tk per tk inpu
( labor cost )+ ( overhead cost )+(Material cost ) ( 40∗15∗6 ) + ( 1.5∗40∗15∗6 ) +(55∗6) 9330

Multifactor Productivity (MFP) of week - 2:

438∗140 61320
MFP= = =5.66 tk per tk input
( 40∗15∗7 )+ ( 1.5∗40∗15∗7 ) +(56∗6) 10836

Multifactor Productivity (MFP) of week - 3:

322∗140 45080
MFP= = =3.65 tk per tk input
( 40∗15∗8 )+ ( 1.5∗40∗15∗8 )+(56∗6) 12336

Multifactor Productivity (MFP) of week - 4:


454∗140 63560
MFP= = =5.15 tk per tk input
( 40∗15∗8 )+ ( 1.5∗40∗15∗8 )+(58∗6) 12348

Process yield of Week-4:

63560−15 % of 63560 63560−9534 54026


= =¿ =4.38 tk per tk input
12348 12348 12348

Multifactor Productivity (MFP) of week - 5:

360∗140 50400
MFP= = =3.64 tk per tk input
( 40∗15∗9 ) + ( 1.5∗40∗15∗9 )+(57∗6) 13842

productivity growth for week 5 in compare with week 2=

3.64−5.66
5.66
* 100% = -34.53%

Productivity has been decreased by 34.53% from week 2 to 5.

Please remember:

1. If the sign is + in productivity growth, it would be increased by…

2. If the unit of cost is given as dollar it would be $ per dollar input.

3. If standard price is not given for output then unit for productivity will be unit
per dollar/ tk input.

Labor productivity: units/ labor hour

Machine Productivity: pieces/ machine hour or Units/ machine hour.

For Multi Factor Productivity (MFP) all the units of input (Labor/ Machine/
Material/ Overhead/ Energy means KW) are converted to dollar or taka.

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