Answer to Question #139124 in Management for yasmin

Question #139124

Rezza Chao Metals Ltd Company makes shopping carts for supermarkets around Labuan. The company recently purchase the new equipment that able to reduces the labor 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. Workers receive RM10 per hour, and machine cost was RM40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by RM12 per hour while output increased by four carts per hour.

a) Compute labor productivity under each system.

b) Compute the multifactor productivity under each system.

c) Comment on the changes in productivity according to the two measures, and

on which one you believe is the more pertinent for the situation.

Expert's answer
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