Cadena De Valor

5 A U.S. manufacturing company operating a subsidiary in an LDC (less developed country) shows the following results:

U.S LDC

Sales (units) 100,000 20,000

Labor (hours) 20,000 15,000

Raw Materials (currency) $20,000 FC 20,000

Capital Equipment (hours) 60,000 5,000

a. Calculate partial labor and productivity figures for the parent and the subsidiary.

Do the result seem misleading?

b. Compute the multifactor productivity figures for labor and capital together. Are the results better?

c. Calculate raw material productivity figures (unit/$ where $1= FC 10). Explain why these figures might be greater in the subsidiary.

6 Various financial data for 2004 and 2005 follow. Calculate the total productivity

measure and the partial measures for labor, capital, and raw materials for this company for both years. What do these measures tell you about this company?

2004 2005

Output: Sales $200,000 $220,000

Input: Labor 30,000 40,000

Raw Materials 35,000 45,000

Energy 5,000 6,000

Capital 50,000 50,000

Other 2,000 3,000

1e A retail store had sales of $45,000 in April and $56,000 in May. The store employs

eight full-time workers (they work a 40-hour week). In April the store also had seven part-time workers at 10 hours per week, and in May the store had 9 part-timers at 15 hours per week (assume four weeks in each month). Using sales dollars as the measure of output, what is the percentage change in productivity from April to May?

2e A fast-food restaurant serves hamburgers, cheeseburgers, and chicken sandwiches.

The restaurant counts a cheeseburger as equivalent to 1.25 hamburgers and chicken sandwiches as 0.8 hamburgers. Current employment is five full-time employees (who work a 40-hour week). If the restaurant sold 700 hamburgers, 900 cheeseburgers, and 500 chicken sandwiches in one week, what is the productivity? What would its productivity have been if it had sold the same number of sandwiches (2,100) but the mix was 700 of each type?

Chapter 2 Answers

5a. Labor Productivity

Country Output in Units Input in Hours Productivity (Output/Input)

U.S 100,000 20,000 100,000/20,000 = 5

LDC 20,000 15,000 20,000/15,000 = 1.33

Capital Equipment Productivity

Country Output in Units Input in Hours Productivity (Output/Input)

U.S 100,000 60,000 100,000/60,000 = 1.67

LDC 20,000 5,000 20,000/5,000 = 4

Yes, the results are misleading as you would expect the capital equipment productivity measure to be higher in the U.S. than in a LDC.

5b. Multifactor – Labor and Capital Equipment

Country Output in Units Input in Hours Productivity (Output/Input)

U.S 100,000 20,000+60,000

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