Dulax Box Plant Multifactor Productivity Before and After Changes - Essay Example

Topic: Dulax Box Plant Multifactor Productivity Before and After Changes There has been increasing need by businesses to measure productivity so as to foster the business aim of making profit. Multifactor productivity is one way to measure effectively and efficiently factors of production are able to generate total output. In this paper we will concentrate on determining the multifactor productivity of Dulax box before the change in inputs and after the change and interpret the multifactor figures.

Multifactor productivity is a ratio that delineates relationship that exist between the real output and the input used to generate or produce the output. In this case input refers to all factors of production combined. Thus, Multifactor productivity measure joint contribution of the various factors of production like labor, capital rather than specific contribution by one factor of production (Ryan, 2011). The multifactor productivity before changes can be calculated as follows,Inputs,Labor cost will be equal to, 5 (workers) x 8 (hours) x $10(cost per hour) x 2 (shifts) = $800 per dayCapital costs = $ 3000 per day Energy costs = $ 400 per dayTotal inputs costs = labor cost plus capital costs plus energy costs = 800 + 3000 +400 = $ 4200Multifactor productivity= total output (in units)/ total input = 500 / 4200 = 0.

1190After changes, Inputs, labor costs = 8 (number of hours) x $ 10 (cost per hour) x 5 (number of workers) x 2 (number of shifts) = $ 800Capital costs = $ 3200 Energy costs =$ 400Total inputs= labor cost plus capital cost plus energy cost = 800 + 3200 + 400 = 4400Total output= 300 x 2 = 600 unitsThe multifactor productivity = output / input = 600 / 4400 = 0.1364 There has been a change in multifactor productivity from 0. 1190 to 0.1364 this shows increased efficiency of the firm and thus, the firm can be said to have increased total productivity.

This increase in productivity cannot be explained by a vary in combined inputs, therefore multifactor productivity in this case reflects changes in expertise and machinery (technology) used in production. Works CitedRyan, M. M. (2011). Handbook of U.S. Labor Statistics: Employment, Earnings, Prices . Maryland: Bernan Press.