Reference no: EM132274007

The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). There are 6 full-time workers on each shift. The company has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. Also, with these changes there are now 5 full-time workers on each shift. Labor costs average $15 per hour for each worker on each shift. Capital costs were previously $3,000 per day, and rose to $3,500 per day with the equipment modifications. Energy costs at $400 per day before the modification and were reduced by 10% with the modifications. The output is measured in terms of the number of boxes that are produced.

a) What is the firm's labor hours productivity after the modifications?

b) What is the percent change in the multifactor productivity comparing the productivity after the modifications to the productivity before the modifications?

c) Suppose the company now wants to increase productivity as measured by the multifactor productivity factor by 5% at the 250 boxes per shift level of output so that it will not need the equipment modifications. To achieve this target, it can only reduce its labor per box. It will use the freed up labor for other activities. How many labor hours per shift at the most can each worker work if the company is to achieve this new level of productivity?