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Operations and Production Management MGMT 405 Answer set 2

MGMT 405 Operations and Production Management


Answer set 2

(Reference chapter 2 William J. Stevenson-2007, ninth edition)

Problems and Solutions

1. Suppose that a company produced 300 standard bookcases last week using eight
workers and produced 240 standard bookcases this week using six workers. In
which was productivity higher? Explain.

Ans: Productivitylast week = standard bookcases produced as output / labor= 300/8=


37.5 sbc/worker

Productivity this week = standard bookcases produced as output / labor= 240/6= 40


sbc/worker

The ouput of this week shows that it has higher productivity than last week. This
answer can be improved.

2. The manager of a crew that installs carpeting has tracked the crews output
over the past several weeks, obtaining these figures.

Week Crew size Yards Installed

1 4 960

2 3 702

3 4 968

4 2 500

2010/11, Sami Fethi, EMU, All Right Reserved, McGraw-Hill, 2007, 9. Ed. 1
Operations and Production Management MGMT 405 Answer set 2

5 3 698

6 2 500

(a) Compute the labor productivity for each of the weeks.


(b) On the basis of your calculation, what can you conclude about crew size and
productivity?

Ans:

(a) Productivity= Yards of carpet installed/ crew size=960/4= 240 yards/number of


crew.

Week Crew size Yards Installed Labor productivity

1 4 960 240

2 3 702 234

3 4 968 242

4 2 500 250

5 3 698 232

6 2 500 250

(b) Probably even-sized crews are better than odd-sizes and a crew of 2 seems to
work best amongst the others.

3.(a) Compute the multi-factor productivity measure for each of the weeks shown.
(b) What do the productivity figures suggest? Assume 40 hour weeks and an hourly
wage of $12. Overhead is 1.5 times weekly labor cost. Material cost is $ 6 per pound.

2010/11, Sami Fethi, EMU, All Right Reserved, McGraw-Hill, 2007, 9. Ed. 2
Operations and Production Management MGMT 405 Answer set 2

Week Output (units) Workers Materials (lbs)

1 30,000 6 450

2 33,600 7 470

3 32,200 7 460

4 35,400 8 480

Ans:

(a)

Overhead
Worker cost Materials Total MFP
Output cost
Week cost cost
(units) 12*40

1 30,000 2880 4320 2700 9900 3.03

2 33,600 3360 5040 2820 11220 2.99

3 32,200 3360 5040 2760 11160 2.89

4 35,400 3840 5740 2880 12480 2.84

Week 1- 12*40*6 =2880= worker cost

Week 1- 12*40*6 =2880* 1.5=4320= overhead cost

Week 1- 450*6 = 2700=material cost

2010/11, Sami Fethi, EMU, All Right Reserved, McGraw-Hill, 2007, 9. Ed. 3
Operations and Production Management MGMT 405 Answer set 2

Week 1- 2880+4320+2700=9900 total cost

Week 1-MFP=output (units)/(labor+materials+overhead) =30000/9900= 3.03


unit per dollar input

(c) Multi-factor productivity dropped steadily from a high of 3.03 to about 2.84

4. A manager checked production records and found out that a worker produced
160 units while working 40 hours. In the previous week, the same worker
produced 138 units while working 36 hours. Compute the workers productivity.
(b) Did his productivity increase, decrease or remain the same? Briefly explain.

(a) Current productivity= produced units as output/ labor hour=160/40=4 unit per
hour

Previous productivity= produced units as output/ labor hour=138/36=3.83 unit per


hour

(b)

Growth productivity= Current Period Productivity Previous Period Productivity


Previous Period Productivity

Growth productivity=4-3.83/3.83=0.044

Thus there was an increase of 4.4 % in productivity.

2010/11, Sami Fethi, EMU, All Right Reserved, McGraw-Hill, 2007, 9. Ed. 4