Please compute the multifactor productivity for process Alpha and Beta. Which process, Alpha or Beta, is more productive? Which one would you recommend? b. If the company chooses the process you recommend, how much increase in productivity (in percentage) the company will get?
1. Cardinal Inc. makes a variety of electronic products. Its camera manufacturing plant is considering choosing between two different processes named Alpha and Beta, which can be used to make two component parts A and B. To make the correct decision, the managers would like to compare the multi-factor productivity of process Alpha with that of process Beta.
The value of process output for component A and B are $175 and $150 per unit, respectively. The corresponding overhead cost is $6,000 for Alpha process and $5,000 for Beta process. The table below presents detailed information.
|
|
Process Alpha |
|
Process Beta |
|
|
|
Product A |
Product B |
Product A |
Product B |
|
Output (units) |
60 |
60 |
40 |
80 |
|
Labor ($) |
$1200 |
$1400 |
$1000 |
$2000 |
|
Material ($) |
$2500 |
$3000 |
$1500 |
$3500 |
Please answer the following questions:
a. Please compute the multifactor productivity for process Alpha and Beta. Which process, Alpha or Beta, is more productive? Which one would you recommend?
b. If the company chooses the process you recommend, how much increase in productivity (in percentage) the company will get?
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