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Three loan officers are currently employed by Victoria Bank at its Katy Branch. Each of these officers currently work eight hours per day. Each officer processes an average of five loans per day. The bank's payroll cost for the officers is $820 per day, and there is a daily overhead expense of $500.
a. Compute the labor productivity.
b. Compute the multifactor productivity. Use both labor and overhead.
With recent trend in increase in loan applicants, the bank is now considering purchase of new computer software for the loan operation. The software will enable each loan officer to process eight loans per day, although the overhead expense will increase to $550.
c. Compute the new labor productivity.
d. Compute the new multifactor productivity.
e. Should the bank proceed with the purchase of the new software? Explain.
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