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Labor productivity

A union employer is able to produce a machined part for $8.90 per unit and the cost of one (1) hour of union labor is $26.70. If a non-union employer is able to pay their employees $17.00 per hour and can produce the identical part with 30 minutes of labor, which supplier should you purchase the part from? If the higher cost employer were able to increase the labor productivity of their shop, what magnitude of increase (as a percent of current labor time) would be necessary to give them a cost advantage. Assume that the only cost associated with producing the product is the involved labor. For the second question, consider all other criteria unchanged.


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