Productivity After Quarters Increasing Levels Production, CEO

Productivity After quarters increasing levels production, CEO Canadian Fabrication & Design upset learn, time expansion, productivity newly hired sheet metal workers declined worker hired. Believing workers lazy inefficiently supervised (possibly), CEO instructed shop foreman "crack" workers bring productivity levels.

Q1.Production

The apparent downturn of productivity on the part of workers has nothing to do with worker laziness and everything to do with the law of marginal returns. For every additional unit manufactured and every additional worker on the floor of the 'shop,' the profit gained from that item decreases. Workers must be paid more in overtime, which decreases the revenue gained, and additionally workers are less efficient on the floor of the factory because of logistical reasons. Crowding, impeded access to machinery and other logistical issues will diminish the marginal return from the increased production. "As the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee... If all other factors of production remain constant, at some point each additional laborer will provide less output than the previous laborer. At this point, each additional employee provides less and less return. If new employees are constantly added, the plant will eventually become so crowded that additional workers actually decrease the efficiency of the other workers, decreasing the production of the factory" (Law of diminishing marginal returns, 2011, Investopedia).

To increase productivity, redesigning the layout of the factory to free up greater space and allow for greater mobility of workers is one possible option. Another possible option is to do an audit of worker traffic on the floor, to find more efficient ways to structure the production process. Finally, improved technology or expanding the plant can result in greater speed and capacity on a more permanent basis. In general, it is easier to thwart the law of diminishing marginal return over time, although in the short-term there is only so much capacity can be expanded with existing resources.

Question 2

It is common to see a 'free month' advertised as part of a campaign to advertise a local gym. However, that free month is never entirely free. First of all, there are the real economic costs of the benefit of the alternative of not joining a particular gym. For example, instead of joining a cheap gym with bare bones facilities that offered a free month as part of its promotional campaign, I could choose another gym with better weight and cardio machines that would give me more optimal fitness benefits.

Secondly, despite the advertisement of 'free' as an enticement, there are still explicit costs attached to joining a gym. Very often the free month requires people to purchase a specific membership package at the gym, such as committing to six months. There are also implicit costs of joining the gym. Now, by working out by running or biking at home, I can 'get away' with fairly basic gear. At the gym, I might need to buy new workout clothes to look more presentable, or new gear to participate in the various classes offered by the gym, like spinning shoes and a weigh belt.