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Produa Berhad has established in 1993 that has offer products geared towards various needs and wants, supported by a far-reaching nationwide sales and services network

  1. Produa Berhad has established in 1993 that has offer products geared towards various needs and wants, supported by a far-reaching nationwide sales and services network for the ultimate convenience of our valued customers. It owns a plant, equipment and vehicles worth of RM155 million and currently, there are 10,500 workers under its direct employment.

Amar Hazwan is a risk management consultant and has been hired by Produa to analyse and recommend the amount to be spent for safety measures in order to reduce worker injuries at 2 departments: Logistic and Parts Warehouse. Below is the injury records for both departments and the costs incurred for a 6-year period:

Year

Number of injured workers

Total cost of injury (RM)

Logistic

Parts Warehouse

Logistic

Parts Warehouse

2014

230

190

72,000

67,500

2015

75

92

35,000

28,980

2016

135

141

120,000

119,550

2017

210

201

37,000

29,690

2018

150

177

116,000

121,000

2019

89

99

109,900

100,890

The sharp increase in the costs of injury in year 2019 has forced Produa to spend RM25,450 and RM32,800 for Logistic and Parts Warehouse respectively on the loss control expenditures in 2020 and the number of injured workers in that year was recorded at 290 people for both departments. In his analysis, Amar has estimate that if there were no loss control expenditures, the number of injured workers would increase to 301 and 303 for Logistic and Parts Warehouse respectively.

The additional spending on loss control expenditures will result in a lower number of injured workers as indicated in the following table:

Loss control expenditures (RM)

Number of injured workers

Logistic

Parts Warehouse

Logistic

Parts Warehouse

50,900

65,600

234

222

76,350

98,400

194

188

101,800

131,200

166

156

127,250

164,000

109

99

152,700

196,800

111

105

Based on the information above:

  1. Calculate the average injury severity for each department.
  2. Based on 3(a), determine and indicate the amount that Produa should spend on safety measures for each department.

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