Reference no: EM13331947
The Marathon Door Company produces doors (surprised?). The firm is tremendously busy, and operates 3 8-hour shifts per day. Each shift is capable of producing 100 doors, and uses 10 workers, each working 8 hours. The cost of labor averages $15 per hour (for one worker). Capital costs are $10,000 per day, and energy costs are $500 per day.
To increase production, the operations manager is considering automating certain processes. He believes that he could increase the output to 150 doors per shift. Labor would stay the same, but capital costs would increase to $20,000 per day, and energy costs would increase to $600 per day.
a. What is Marathon’s present multifactor productivity?
b. What is new estimated multifactor productity?
c. Do you recommend they make the change? Why
Format your answer as follows;
Part a. answer: _______________
Part b. answer: _______________
Part c. answer: _______________
Work for parts a and b
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