An operation has a 15 percent scrap rate As a result 64 piec

An operation has a 15 percent scrap rate. As a result, 64 pieces per hour are produced. What is the potential increase in labor productivity that could be achieved by eliminating the scrap?

Solution

Scrap Rate = 15%

Production per hour with 15% scrap rate = 64 pcs

i.e., with 85% material output is 64 pcs

=> 85 / 100 x A = 64

=> A = 64 x 100 / 85

=> A = 75.29 pcs

Therfore if scrap will be eliminated then production per hour will be 75.29 pcs i.e production per hour will be increased by (75.29-64) = 11.29 pcs which will yield (11.29 / 64) = 0.1764 or 17.64% more productivity.