[SOLVED] Question & Answer: Charles Lackey operates a bakery in Idaho​ Falls, Idaho. Because of its excellent product and excellent​…

Charles Lackey operates a bakery in Idaho​ Falls, Idaho. Because of its excellent product and excellent​ location, demand has increased by 45​% in the last year. On far too many​ occasions, customers have not been able to purchase the bread of their choice. Because of the size of the​ store, no new ovens can be added. At a staff​ meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by​ hand, requiring additional manpower. This is the only thing to be changed.  The bakery currently makes 1,500 loaves per month. The pay will be ​$88 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of ​$150 per​ month, but he will achieve the same new output​ (an increase to 2,175.00​) as the change in labor hours. ​a) Current productivity for 640 work hours​ = nothing ​loaves/dollar ​(round your response to three decimal​ places). If Charles chooses to increase the number of work hours to 928 in order to employ the new oven loading​ technique, then the productivity is​ = nothing ​loaves/dollar ​(round your response to three decimal​ places). ​b) If Charles instead chooses to purchase a new blender​ (while holding labor constant at 640 hours at ​$88 per ​hour)​, then the productivity is​ = nothing ​loaves/dollar ​(round your response to three decimal​ places). ​c) By adding​ manpower, the percentage increase in productivity is nothing​% ​(enter your response as a percentage rounded to two decimal places and include a minus sign if​ necessary). By purchasing a new blender​ (while holding labor constant at 640 hours at ​$88 per ​hour)​, the percentage increase in productivity is ___​% ​(enter your response as a percentage rounded to two decimal places and include a minus sign if​ necessary).

Expert Answer

Answer A:- Current Productivity = Current Output / Labor hours = 1500/640   = 2.344

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With an increase in labor:-

Output = (1500*1.45) = 2175

Labor hours= 928

Labor productivity = output / labor hours

Labor Productivity = 2175 / 928 = 2.344

Change in productivity = New Labor Productivity – Previous Labor Productivity = 2.344 – 2.344 = 0

No Change in productivity.

Answer B:- With an increase in investment

Output = 2175

Labor Hours = 640

Current Productivity = 2175 / 640 = 3.4

% change in productivity = (3.4 – 2.344)/2.344 * 100

% change in productivity = 45%

charles lackey operates a bakery in idaho falls idaho

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