Modern Lumber, Inc. (MLI) produces apple crates, which it sells to growers. With the current equipment, MLI produces 240 crates per 100 logs. It currently purchases 100 logs per day, and each log requires three labor hours to process. MLI is considering the hire of a professional buyer who can buy better quality logs at the same cost. If this is the case, MLI can increase production to 260 crates per 100 logs, and the labor hours required will increase by eight hours per day (for the buyer).

a. Compute the labor productivity for the current method (i.e., no buyer).

b. Compute the labor productivity be if MLI hires the professional buyer? Suppose that MLI spends $12 per hour for each worker who constructs the crates. The buyer, however, is paid $24 per hour. The material cost is $10 per log (regardless of who purchases them).

c. Compute the multifactor productivity for the current method, using crates per dollar cost (labor + materials) as the measure.

d. How does the multifactor productivity change if the professional buyer is hired?