PRODUCTION MANAGEMENT - Review Question

PRODUCTION MANAGEMENT

Topic: Review Question 

  

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 Note: It is a good thing to cram formulas and steps: 

THE PROBLEM:

Ask Ralph Blog Spot, a noted blogger and a producer of apple pies sold to supermarket has been able with its current equipment to produce 24 pies per bushel of apples.  It currently purchases 100 bushels per day and each bushel  requires 3 man hours to process.  It believes that it can hire a professional food broker who can buy a better quality apple at the same cost.  If this is the case, he can increase its production to 26 pie per bushel.  Its labour hours will increase.

What will be the impact on productivity?

THE SOLUTION:

Here is the formula:

Productivity =          Output

                                      Input

 Current Production (C/P)  =        24 pies x 100 bushels

                                                              3hours x 100 bushels

                                                =          2,400

                                                                300    = 8 per pie, per man hour

When it now hired a food broker;

It will now be;

Productivity =          Output

                                      Input

                                       26 pies x 100 bushels

                            100 bushels x 3hours + 8 hours

  2,600            2,600

300 + 8     =    308               =          8.44

8.44 per pie, per man hour