krm8_ism_ch01 - Chapter 1 Operations as a Competitive...

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Chapter 1 Operations as a Competitive Weapon DISCUSSION QUESTIONS 1. Answering this question demonstrates that processes underlie all of our jobs. What might be surprising is how many students would put their job in the category of “other,” suggesting that many jobs do not fall neatly into any one functional area. Perhaps many in the “other” category might best be called “operations” on further reflection. Customers, both internal and external, are part of each process, and the goal is to manage the processes to add the most value for them. 2. Some responsibilities generally supported will include responsibilities to stockholders, to customers, to the environment, to provide safe working conditions, and to pay taxes. More debatable are responsibilities to provide medical care, maternity leave, child care, retirement, and minimum wages and responsibilities to the community other than paying taxes. 3. The problems of unions faced with international competition are mentioned in the Caterpillar video. NAFTA and GATT are still in the news. Does lifting trade barriers expose workers to competition from workers in undeveloped economies? Or does increased opportunity to compete result in more exports and more jobs? With decreased tariffs, are multinationals moving operations elsewhere to escape unions and environmental regulations? Students should recognize that effective operations management is a key to favorable outcomes. PROBLEMS 1. Boehring University a. Productivity has increased by 76% compared to Solved Problem 1 (productivity = 100 . ). Value of output: students credit-hours $200 tuition $100 state support 75 3 $67,500 class class student credit-hours + × × =
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2 l PART 1 l Using Operations to Compete Value of input: labor + material + overhead $25 $6500 75 students $30,000 student $38,375 class class + × + = Productivity ratio: Productivity Output $67,500 1.76 Input $38,375 = = = Labor productivity has increased about 58% compared to Solved Problem 1. b. Value of output is the same as in part a: $67,500 class Labor-hours of input: 20 16 320 hours week weeks class hours class × = Productivity ratio: Labor Productivity Output $67,500 $210.94 hour Input 320 hours = = = The $192 season ticket price is not used in this calculation. It is a “red herring.” These calculations can be confirmed with Tutor 1.1 by substituting students into the “ticket sold” field, tuition (for 3 credit-hours) into the “price filed,” and state support for the “Surcharge” field. Their results are shown following:
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Operations as a Competitive Weapon l CHAPTER 1 l 3 Tutor 1.1 Productivity Measures Place cell pointer on green-shaded areas to examine formulas. a. Multifactor productivity is the ratio of the value of output to the value of input.
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krm8_ism_ch01 - Chapter 1 Operations as a Competitive...

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