Productivity (Labor, Total) Calculations
1. A company
that makes shopping carts for supermarkets and other stores recently purchased some
new equipment that reduces the labor content of the jobs needed to produce the
shopping carts. Prior to buying the new equipment, the company used five
workers, who produced an average of 80 carts per hour. Labor cost was $10/hour
and machine cost was $40/hour. With the new equipment, it was possible to
transfer one of the workers to another department, and equipment cost increased
by $10/hour while output increased by four carts per hour.
a. Compute
labor productivity under each system. Use carts per worker hour as the measure
of labor productivity.
b. Compute
the total productivity under each system. Use carts per dollar cost (labor plus
equipment) as the measure.
c. Comment
on the changes in productivity according to the two measures, and on which one
you believe is the more pertinent in this situation?
2. The
quarterly data presented here show the number of appliances (in thousands)
returned to a particular manufacturer for warranty service over the past five
years.
YEAR RETURNS (in
1000 units)
2002
1st quarter 1.2
2nd quarter 0.8
3rd quarter 0.6
4th quarter 1.1
2003
1st quarter 1.7
2nd quarter 1.2
3rd quarter 1.0
4th quarter 1.5
2004
1st quarter 2.5
2nd quarter 2.3
3rd quarter 2.2
4th quarter 2.4
2005
1st quarter 2.6
2nd quarter 2.2
3rd quarter 1.9
4th quarter 2.5
2006
1st quarter 2.9
2nd quarter 2.5
3rd quarter 2.2
4th quarter 3.0
a. Do the
data exhibit any patterns? Please explain.
b. Use an
appropriate exponential smoothing forecasting procedure to produce forecasts
for the first, second, third and fourth quarters of 2007. Please choose the
values of the exponential smoothing constant(s) in such a way that the mean
squared error is minimized
c. How
would the company use these forecasts?
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