3. Smarmy Sales, Inc. (SSI), sells herbal remedies through its Web site and through phone reps. Over the past six years, SSI has started to depend more and more on its Web site to generate sales. The following table shows total sales, phone rep costs, and Web site costs for the last six years.

a. (*) Calculate productivity for the the phone reps for each of the past six years. Interpret the results.

b. (*) Calculate the productivity for the Web site for each of the past six years. Interpret the results.

c. (**) Compare your results in Parts a and b.What are the limitations of these single-factor productivity measures?

d. (**) Now calculate a multifactor productivity score for each year, where the “input” is the total amount spent on both the phone reps and the Web site. Interpret the results.What can you conclude?

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PHONE REP WEB SITE YEAR TOTAL SALES COSTS COSTS 1999 $4,790,000 $200,000 $50,000 2000 $5,750,000 $210,000 $65,000 2001 $6,900,000 $221,000 $85,000 2002 $8,280,000 $230,000 $110,000 2003 $9,930,000 $245,000 $145,000 2004 $11,920,000 $255,000 $190,000