Labour Productivity Improvements in Distribution Centre:

Case study:

Over the past decade, Singapore's economy has grown by about 5% per annum but its productivity grew only about 1% per annum. Moreover, productivity gains have declined in the recent years due to heavier reliance on labour inputs. Therefore, the Singapore Government has decided to focus on productivity improvements and the Productivity Taskforce has identified Logistics and Storage as one of the 12 priority sectors to focus on. SIM Logistics provides integrated logistics solutions to several large MNCs in the electronics industry. The company employs 350 staff and operates 3 distribution centres in Singapore.

Mr Ng is the Executive Director of SIM Logistics and has been with the company for 15 years. In response to the Government's call to raise labour productivity, Mr Ng implemented a major improvement project from June to December 2011. During this period, the company had successfully streamlined many key processes and also conducted extensive training for all the staff in the improved processes.

The labour productivity in the distribution centres is measured by the number of order lines shipped per labour hour. The attached excel file provide this daily labour productivity data from randomly selected days before June 2011 indicated as "Before" and from randomly selected days after December 2011 indicated as "After". Your group has been appointed to assist Mr Ng to analyse the data using a suitable choice of statistical software and provide solutions to the following questions:

Use an appropriate test of hypothesis to determine if the mean labor productivity is significantly higher after the major improvement project. You should include the following:

(a) State the null and alternative hypotheses and explain how you develop these two hypotheses. Perform an appropriate hypothesis test with α = 0.05 using critical value approach. Compute the p-value corresponding to the value of the calculated test statistics from Show the Numeric Expression used and comment on the p-value.

What are the assumptions made in performing the hypothesis test? Are these assumptions reasonable for this case? Please provide explanation to substantiate your view.

(b) Highlight three (3) possible business or statistical concerns regarding the approach used here in determining whether the mean labor productivity is significantly higher after the major improvement project. If your group has a free hand on the project, starting from measurements, sampling, to analysis, what recommendations would you give for the problem in question? Keep your answer within 400 to 500 words (indicate your word count)