Question
Productivity Measurement, Technical and Allocative Efficiency, Partial Measures Bellamy Company produces handcrafted pottery that uses two inputs: materials and labor. During the past quarter,
Productivity Measurement, Technical and Allocative Efficiency, Partial Measures Bellamy Company produces handcrafted pottery that uses two inputs: materials and labor. During the past quarter, 27,000 units were produced, requiring 108,000 pounds of materials and 54,000 hours of labor. An engineering efficiency study commissioned by the local university revealed that Bellamy can produce the same 27,000 units of output using either of the following two combinations of inputs: Combination F1 Combination F2 Inputs: Materials Labor 72,000 30,000 83,800 34,000 The cost of materials is $8 per pound; the cost of labor is $16 per hour. Required: 1. Compute the output-input ratio for each input of Combination F1. If required, round your answers to two decimal places. Materials Labor 25 50 Does this represent a productivity improvement over the current use of inputs? Yes What is the total dollar value of the improvement? Classify this as a technical or an allocative efficiency improvement. Allocative efficiency Finally, describe which data analytic types were used in addressing these issues (descriptive, diagnostic, predictive, and prescriptive; see Exhibits 2.5 and 2.6, for a brief review). The calculation of the current productivity ratios is diagnostic as it describes what it is. The calculation of the F1 productivity ratios is 2. Compute the output-input ratio for each input of Combination F2. If required, round your answers to two decimal places.
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