You manage a company that installs decks. Currently, your team installs 290 square feet of deck per day. You have teams of four workers per shift, and your teams work two eight hour shifts per day. Your equipment capital costs are $50 per day. Your material use is 140 linear feet of decking per day and 37 pounds of other raw material per day. Your costs are $15 per labor hour, $3.50 per linear foot of decking, and $1.15 per pound of other raw material.
You hire a USC Upstate operations management student named Emily to improve productivity. Emily works with your workers to brainstorm and develop three possible approaches.
• The first approach is to reduce material costs. She found a supplier who will charge $3.00 per linear foot of decking and $1.00 per pound of other raw material.
• The second approach is to improve work methods. In this approach, it is estimated that the team will install 355 square feet of deck per day. The material use is estimated to be 130 linear feet of decking and 32 pounds of other raw material.
• The third approach is to automate some parts of the installation process. This would increase capital costs for new equipment and reduce workers used. In this approach, it is estimated that the team will install 325 square feet of deck per day. The team can be reduced by one person per shift. The capital costs will increase to $150 per day.
By what percentage was productivity improved with your choice of best approach?