Question

Suppose that you are the leader of the productivity improvement team. Your team investigates the impact of 25% increasing inputs and 10% increasing outputs on the productivity. Which of the following is correct?

		The productivity increases 12%.
		The productivity decreases 12%.
		The productivity increases 1%.
		The productivity does not change.
		None of the above.

39. Which of the following method is used to figure out how many products need to be sold in the marketplace to cover total costs?

		enterprise resource planning
		break-even analysis
		forecasting
		materials resource planning
		make or buy analysis

Answer 1

Q.1

Let us assume that the initial input is = 100 units

And initial output is also 100 units.

Therefore, productivity 1=  output/input = 100/100 =1

productivity 1= 1

Then, inputs increase by 25% = therefore, new input = 100+25% of 100 = 100+25 =125 units

Outputs increase by 10%

Therefore, outputs = 100+10% of 100 = 100+10 = 110 units

Therefore, new productivity that is

Productivity 2= output/input= 110/125

Productivity 2= 0.88

Now, we will calculate productivity improvement by subtracting old productivity from new productivity

=Productivity 2- Productivity 1

=0.88 -1=  -0.12

in the next step, we will divide the productivity improvement rate by the old productivity rate and multiply by 100. We will get % increase/decrease

= -0.12/1 ×100

= -12

Therefore as the answer is negative, there is a 12% decrease in productivity.

que 2.

Which of the following method is used to figure out how many products need to be sold in the marketplace to cover total costs?

The correct answer is break-even analysis.

Break-even analysis is a widely used financial tool which is used to ascertain the stage at which the product or service becomes profitable. Financial calculation is conducted, through which it is determined how many units of a product need to be sold in order to cover the costs.

Thus at this situation, the company has covered all its costs and there is no profit, no loss situation.

Thus, the answer is break even analysis.

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