Norregian Salmon Processing Facility, Trondhein

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NORREGIAN SALMON PROCESSING FACILITY, TRONDHEIN [pic] CASE STUDY 1: Norwegian Salmon Processing Facility, Trondheim I. CASE BACKGROUND NorSal Trondheim operates a salmon processing facility where the purchase fish from local sources along the North Sea, processed at the facility, and sold to customers for distribution. Inger Hansen, the plant manager, wants to upgrade the technology in the plant. The modernizing of equipment will increase the capacity per hour for them to cover the additional demands. Currently the plant operates five days a week, two shifts with 30 workers per shift at $10 per hour. It is not possible for adding a third shift since the times is allotted for the cleaning of the facility. The old equipment produces 1,500 pounds of salmon per hour, while the new equipment can produce 2,000 pounds per hour. Though the production manager, Bjorn Person is hesitating for the plan modernization because the older equipment has been paid for, and the new equipment will cost them $10,000 per week. The controller, Maret Karlsen takes into consideration that energy consumption must be taken into analysis as well. The current equipment consumes 1,000 units of energy per week at $10 per unit. On the other hand, the new equipment will cut down the cost of energy by 50%. 1. What is the productivity of the processing facility, with the equipment currently in use? Answer: In keeping the current equipment of Norwegian Salmon, the multifactor productivity is 3.53 units output per dollar. This is computed by getting all the inputs such as follows: a) labor: 30 workers x 2 shift x5 days at $10 per hour= $24,000.00 per week, b) energy: $10 per unit x1000 units per week= $10,000.00 per week, c) equipment: at $0 value because the equipment is already paid for. Output is

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