TLW Consulting has been concerned about declining profitability and the president has asked you to evaluate productivity over the past two years. After several weeks, you have managed to collect the following data about company operations.

2019   2020
Billable Hours 125,000   135,000
Labor Hours 150,000   160,000
Travel $4,000,000   $4,500,000
Information Technology $3,200,000   $5,800,000
Management Overhead $5,000,000   $7,000,000
Capital Investment $3,000,000   $4,500,000

The average charge for billable hours is $325 and the average cost per labor hour is $105. Invested capital is exclusive of information technology investment. The productivity of an individual factor involves comparing the cost of that input factor to the value of the output, which is billable hours.
1. what is the output in hours?
2.a. What is the labor productivity for 2019 in dollars?
2.b. What is the labor productivity for this 2020 in dollars?
2.c. What is the percent change in productivity?

3.a. What is the total-factor productivity (use all the inputs) for 2020 based on the above factors?

3.b. What is the total-factor productivity for 2019?

3. c. What is the change in productivity from 2019 to 2020.



Problem 4: How well is the company doing? What would you recommend to the Boss? (Thinking question)

Problem 5:
Location Lawrence Kansas City Manhattan
pieces processed 7000 6500 7500
workers/hr 5 8 12
hourly wage rate $9.50 $10.25 $9.50
overhead/hour $25.00 $20.00 $40.00

What is the multi-factor productivity for each of the centers per hour (units/$)?

Problem 6:
Based on the results of problem 5, which plant should the company shut down?

7. What is the difference between efficiency and utilization?
8. What is the best scheduling method to use?
9. What is Rough Cut Capacity Planning? And, what is the drawback of this technique?
10. What is the link between the Theory of Constraints and the capacity of a facility/operation?

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