PRODUCTIVITY Miss. Nourhan has presented the following data:

Currently, the plant operates 5 days a week, in two shifts of 30 workers per shift. The workers are paid $10 per hour. Adding a third shift is not possible because the plant needs to be cleaned during this time.

Using the current equipment, around 1,500 valves can be processed each hour, while the new plant would be able to process 2,000 valves per hour. The updated equipment is made by the same manufacturer as the existing equipment, and the production personnel feel that they will be able to learn to use the new equipment quickly. For this reason, costs to train personnel are assumed to be negligible.

The financial manager, Miss. Molka, is skeptical about the benefit of the plant modernization. The older equipment, he argues, is already paid for, and new equipment would cost L.E 10,000 per week. This cost includes both principal and interest, as well as manufacturer installation of the equipment.

She cautions that all decisions related to costs should be included in the analysis and that the different energy consumption of the new equipment must also be accounted for in the decision. Energy costs are presently L.E 10 per unit, and the existing plant uses 1,000 units of energy per week. With the modernized plant, the consumption of energy would fall by 50%.

Required: 1. What is the productivity of the processing facility, with the equipment currently in use? 2. What would the productivity of the plant become if the new equipment were purchased and implemented? 3. What would be the amount of additional expense on equipment that would make productivity of the two systems equal? 4. What might happen if energy costs increase in the future?