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Bob Richards, the production manager of Chemicals, m Houston, Texas, is preparing his quarterly report, which is to include a productivity analysis for his department. One of the inputs is production data prepared by Sharon Wilford his operations analyst. The report, which gave this morning, showed the following: Bob knew that his labor cost per hour had increased from an average of S13 per hour to an average of $20 per hour, primarily due to a move by management to become more competitive with a new company that had just opened a plant in the area. He also knew that his average cost per barrel of raw material had increased from S320 to S450. He was also concerned about the accounting procedures that increased his capital cost from $400,000 to $600,000, but earlier discussions with his boss suggested that there was nothing that could be done about that allocation. Bob wondered if his productivity had increased at all. He called Chief Operations Officer, Sarah Smart, moto his office and conveyed the above information to her and asked her to prepare this part of the report. 1. Prepare the productivity part of the report for Mr. Richards. He expects an analysis of single factor productivity, as well as a multifactor analysis for both years, with the percentage change in productivity between 2015 and 2016. Management’s expectation for departments such as Mr. Richards’s is an annual productivity’ increase of at least 5%. Did he achieve this goal? Explain your results.
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