CMA Intermediate · Operations Management and Strategic Management · Introduction to Operations Management
A bakery in Indore produces 4,800 loaves in a month using 600 labour hours. Next month it plans 5,400 loaves using 640 labour hours. What is the percentage change in labour productivity, to the nearest whole per cent?
Labour productivity rises from 8 loaves per hour to about 8.44 loaves per hour, an increase of roughly 5%. The 12.5% output growth is partly offset by the increase in labour hours from 600 to 640.
- AIncrease of 5%Correct
- BIncrease of 12.5%
- CDecrease of 5%
- DIncrease of 8%
Explanation
Current productivity = 4,800/600 = 8 loaves per hour. Planned = 5,400/640 = 8.4375 per hour. Change = 0.4375/8 = 5.47%, which is about 5% to the nearest whole per cent. Option B only reflects the 12.5% rise in output and ignores the extra hours.
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