Compute labour and multifactor productivity ratio

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Reference no: EM1374599

Q. "Mack's guitar fabrication shop produces low cost, highly durable guitars for beginners. Typically, out of 100 guitars that begin production each month, only 80 percent are considered good enough to sell. Or 20 percent are scrapped due to quality problems that are identified after they have completed production process. Each guitar sells for $250. Because some of production process is automated, each guitar only requires 10 labour hours. Each employee works an average of 160 hours per month. Labour is paid at $10/hour, materials cost is $40/guitar and overhead is $4,000. A. Compute labour and multifactor productivity ratio. B. After some study, operations manager recommends 3 options to improve business's multifactor productivity: (1) increase sales price by 10 percent, (2) improve quality so that only 10 percent are defective or (3) reduce labour, material and overhead costs by 10 percent. Which option has greatest impact on multifactor productivity measure?"

Reference no: EM1374599

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