Zychol Chemical

I. Statement of the Problem

How can Bob Richards achieve his productivity goal of 5%?

II. Objectives:

a. To analyze productivity by using single-factor productivity and multi-factor productivity

b. To assess the implication of productivity change to its business operations

III. Discussion to questions:

1. Prepare the productivity part of the report for Mr. Richards. He probably expects some analysis of productivity inputs for all factors, as well as multifactor analysis for both years with the change in productivity and amount noted.

2. The producer price index had increased from 120 to 125 and the fact seemed to indicate to Mr Rhichards that his costs were too high. What do you tell him are the implications of this change in the producer price index?

Producer Price Index (PPI) is a weighted index of prices measured at the wholesale, or producer level.

If the prices paid to producers increase, businesses are faced with either charging higher prices or taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.

3. Management’s expectation for departments such as Mr. Richards’ is an annual productivity increase of 5%. Did he reach the goal?

No. For all types of analysis: single factor productivity – labor hours, single factor productivity – raw materials, and multifactor analysis, Mr. Richards did not reach his goal of 5%.

Single productivity – labor hours – increase of 4.76%

Single productivity – raw material– increase of 3.70%

Multifactor – decrease of 11.68%

IV. Alternative Courses of Action:

1. Find new and cheaper sources of raw materials and labor.

Pros | Cons |

Improve multi-factor productivity | Risk of impacting quality of output (units) |

Cheaper cost | Needs significant effort to find new sources |

2. Find ways to optimize production processes that is more efficient, safe, and reliable

Pros | Cons |...