A Company Has Introduced a Process Improvement That Reduces Processing

question 58

Essay

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?

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Definitions:

Lewin's Planned-Change Process

A model that outlines the steps for successful organizational change: unfreezing, changing, and refreezing.

Managers

Responsible for and support the work of others.

Stage

A specific phase or period in a process, development, or series of events.

Sustainable Career Advantage

A combination of personal attributes that allow you to consistently outperform others in meeting the needs of employers.