Productivity Measurement, Technical and Allocative Efficiency, Partial Measures Bellamy Company produces handcrafted pottery that uses two inputs: materials and labor. During the past quarter, 22,000 units were produced, requiring 88,000 pounds of materials and 44,000 hours of labor. An engineering efficiency study commissioned by the local university revealed that Bellamy can produce the same 22,000 units of output using either of the following two combinations of inputs: Combination F1 Combination F2 Inputs: Materials 71,000 84,100 Labor 32,000 33,400 The cost of materials is $8 per pound; the cost of labor is $15 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 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. Technical 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). 1 as it describes what it is. The calculation of the F1 productivity ratios is The calculation of the current productivity ratios is descriptive predictive 2. Compute the output-input ratio for each input of Combination F2. If required, round your answers to two decimal places. Materials Labor Does this represent a productivity improvement over the current use of inputs? Yes Now, compare these ratios to those of Combination F1. What has happened? F2 has lower productivity for materials and higher productivity for labor. 3. Compute the cost of producing 22,000 units of output using Combination F1. $ Compare this cost to the cost using Combination F2. Cost of Combination F1 Cost of Combination F2 Difference Does moving from Combination F1 to Combination F2 represent a productivity improvement? No What would be your recommendation to Bellamy? Overall, Combination F1 produces the lesser productivity improvement for Bellamy more than Combination F2. 4. Some would argue that the entire productivity analysis from start to finish is an example of a prescriptive data analytic model. What case would you make to support this position? A descriptive data analytic model produces an outcome that tells the decision maker what should be done