Link's Lumber creates pressure-treated utility poles from pine logs bought from several surrounding pine plantations. At the Link's Lumber operation, a batch of 100 pine logs yields 85 utility poles with 5 labor-hours required to process the entire batch. Link's Lumber is owned by Artemis Link, whose brother Devious Link is plan- ning to marry Betty Davis, owner of Northlands Pine Plantation. Artemis expects that his future sister-in-law will sell him pine logs for the same price he is paying to purchase them from other growers right now. The difference in Northlands Pine Plantation logs, however, is that they are considerably higher-quality wood than the logs he purchases from his current suppliers. If Betty agrees to sell him Northlands Pine Plantation pine logs, each batch of 100 logs can be expected to yield 100 util- ity poles, although it will take an additional 4 labor-hours per batch to process the higher-quality wood. a. What is the current labor productivity at Link's Lumber? b. What will happen to labor productivity at Link's Lumber if indeed Artemis Link is able to purchase Northlands Pine Plantation lumber from Betty? c. Suppose that Link's Lumber currently buys batches of 100 pine logs for $40, but Betty will want $60 for a batch of 100 Northlands Pine Plantation logs. Assuming labor at $30 an hour, what are the appropriate multifactor productivity measures for production from the current logs and production from Northlands Pine Plan- tation logs?
Link's Lumber creates pressure-treated utility poles from pine logs bought from several surrounding pine plantations. At the Link's Lumber operation, a batch of 100 pine logs yields 85 utility poles with 5 labor-hours required to process the entire batch. Link's Lumber is owned by Artemis Link, whose brother Devious Link is plan- ning to marry Betty Davis, owner of Northlands Pine Plantation. Artemis expects that his future sister-in-law will sell him pine logs for the same price he is paying to purchase them from other growers right now. The difference in Northlands Pine Plantation logs, however, is that they are considerably higher-quality wood than the logs he purchases from his current suppliers. If Betty agrees to sell him Northlands Pine Plantation pine logs, each batch of 100 logs can be expected to yield 100 util- ity poles, although it will take an additional 4 labor-hours per batch to process the higher-quality wood. a. What is the current labor productivity at Link's Lumber? b. What will happen to labor productivity at Link's Lumber if indeed Artemis Link is able to purchase Northlands Pine Plantation lumber from Betty? c. Suppose that Link's Lumber currently buys batches of 100 pine logs for $40, but Betty will want $60 for a batch of 100 Northlands Pine Plantation logs. Assuming labor at $30 an hour, what are the appropriate multifactor productivity measures for production from the current logs and production from Northlands Pine Plan- tation logs?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Transcribed Image Text:Link's Lumber creates pressure-treated utility poles from pine logs bought from
several surrounding pine plantations. At the Link's Lumber operation, a batch of
100 pine logs yields 85 utility poles with 5 labor-hours required to process the entire
batch. Link's Lumber is owned by Artemis Link, whose brother Devious Link is plan-
ning to marry Betty Davis, owner of Northlands Pine Plantation. Artemis expects
that his future sister-in-law will sell him pine logs for the same price he is paying
to purchase them from other growers right now. The difference in Northlands Pine
Plantation logs, however, is that they are considerably higher-quality wood than the
logs he purchases from his current suppliers. If Betty agrees to sell him Northlands
Pine Plantation pine logs, each batch of 100 logs can be expected to yield 100 util-
ity poles, although it will take an additional 4 labor-hours per batch to process the
higher-quality wood.
a. What is the current labor productivity at Link's Lumber?
b. What will happen to labor productivity at Link's Lumber if indeed Artemis Link
is able to purchase Northlands Pine Plantation lumber from Betty?
c. Suppose that Link's Lumber currently buys batches of 100 pine logs for $40, but
Betty will want $60 for a batch of 100 Northlands Pine Plantation logs. Assuming
labor at $30 an hour, what are the appropriate multifactor productivity measures
for production from the current logs and production from Northlands Pine Plan-
tation logs?
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