Case Study 5 Productivity Allison Container Company produces glass bottles for use in a local beverage company Currently, Allison Container Company produces 1600 cases of bottles per day The 20 workers at Allison Container Company work from 7 a m until 4 p m , with 30 minutes off for lunch and a 15 minute break during the morning work session and another at the afternoon work session Allison Container Company is in the competitive packaging industry and needs to increase productivity to stay competitive They feel that a 20 percent increase is needed Allisons management believes that the 20 percent increase will not be possible without a change in working conditions, so they change work hours The new schedule calls on workers to work from 7 30 a m until 4 30 p m , during which workers can take one hour off at any time of their choosing Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday After this change, bottle production increased to 1800 cases of bottles per day Required Calculate labour productivity for the initial situation 4marks Calculate labour productivity for the hypothetical 20 percent increase 4 marks What is the productivity after the change in work rules 3 marks Write a short paragraph analysing these results 4 marks JEANNAs Welding and Upholstery Establishment produces a special type of metal mini chairs, which are used mostly by Basic Infant schools in the parish of St Elizabeth Current operations allow the welding assembly to make 550 mini chairs per day, in two 8 hour shifts (275 mini chairs per shift) The JEANNAs has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 325 mini chairs per shift Labor costs average $10 per hour for each of the 5 full time workers on each shift Capital costs were previously $3,000 per day, and rose to $3,200 per day with the equipment modifications Energy costs were unchanged by the modifications, at $400 per day What is the firm's multifactor productivity before the changes (5 marks) What is the firm's multifactor productivity after the changes (5 marks)

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Posted on Oct 28, 2024

Case Study 5: Productivity

Allison Container Company produces glass bottles for use in a local beverage company. Currently, Allison Container Company produces 1600 cases of bottles per day. The 20 workers at Allison Container Company work from 7 a.m. until 4 p.m., with 30 minutes off for lunch and a 15-minute break during the morning work session and another at the afternoon work session. Allison Container Company is in the competitive packaging industry and needs to increase productivity to stay competitive. They feel that a 20 percent increase is needed. Allisons management believes that the 20 percent increase will not be possible without a change in working conditions, so they change work hours. The new schedule calls on workers to work from 7:30 a.m. until 4:30 p.m., during which workers can take one hour off at any time of their choosing. Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday. After this change, bottle production increased to 1800 cases of bottles per day.

Required:

Calculate labour productivity for the initial situation [4marks]
Calculate labour productivity for the hypothetical 20 percent increase [4 marks]
What is the productivity after the change in work rules? [3 marks]
Write a short paragraph analysing these results. [ 4 marks]

JEANNAs Welding and Upholstery Establishment produces a special type of metal mini-chairs, which are used mostly by Basic/Infant schools in the parish of St Elizabeth. Current operations allow the welding assembly to make 550 mini-chairs per day, in two 8-hour shifts (275 mini-chairs per shift). The JEANNAs has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 325 mini-chairs per shift. Labor costs average $10 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3,000 per day, and rose to $3,200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day.