PC.54 Claire & Dee's Tire Factory in Rexburg provides a free tire-rotation service for customers who purchase tires from them. For years this process took an average employee about 20 minutes to perform. Since they make no additional revenue from this service, they would like to make this process as efficient (or productive) as possible. Recognizing this challenge, management and key employees analyzed the process and made some time-saving changes. Over the course of a month they trained all employees on the new process, and after doing so, an average employee could rotate a set of four tires in about 15 minutes.In this case, what is the output that should be used for productivity calculations?

Labor productivity is determined as the total output produced by an average worker during one hour. In this case, to determine the productivity of Claire & Dee's employees, you would need to determine how many sets of tires can an employee change in one hour = 60 minutes / 15 minutes = 4.

Answer Link

anthougo anthougo · Answer 2 · 2022-01-25T15:35:12+01:00

The output that should be used for productivity calculations is the new productivity improvement rate of 8%.

Data and Calculations:

Old efficiency rate = 33% (20/60 x 100)

New efficiency rate = 25% (15/60 x 100)

Productivity Improvement Rate

The new productivity improvement rate is 8% (5/60 x 100) or (33% - 25%), showing that workers can provide 4 free tire rotation services for customers in an hour, unlike the 3 free tire rotation services they provided under the old regime.

Thus, the output that should be used for productivity calculations is the new productivity improvement rate of 8%.

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