1. Business
  2. Operations Management
  3. a company has introduced a process improvement that reduces processing...

Question: a company has introduced a process improvement that reduces processing...

Question details

A company has introduced a process improvement that reduces processing time for each unit; output is increased by 25 percent with less material, but one additional worker is required. Under the old process, five workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previously $16/unit. For the new process, material is now $10/unit. Overhead is charged at 1.6 times direct labor cost. Finished units sell for $31 each. What increase in productivity is associated with the process improvement?

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution