Operations and Production Management

Topics: Productivity, 3rd millennium, Cost accounting Pages: 5 (364 words) Published: May 4, 2014

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= 37.8 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 crew’s 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
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. 2. (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.

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)

Week
Output (units)
Worker cost
12*40
Overhead cost

Materials cost
Total cost
MFP
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
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 worker’s 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 Current 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.
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