Chapter 1 Intor to OM

Chapter 1 Intor to OM - Welcome ISM3600...

Info iconThis preview shows pages 1–19. Sign up to view the full content.

View Full Document Right Arrow Icon
    Welcome                     ISM 3600         Introduction to Operations Mgt.                                    Dr. Verma  
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    General Information   All  handouts including syllabus will be             posted on Blackboard.   Refer to the syllabus about structure of     course, course requirements, exams  and  grades.    Contact Dr. Verma via e-mail if you have  any questions at [email protected]    
Background image of page 2
   
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Given: Company needs 10,000,000 units
Background image of page 4
    Problem Produce in house: FC = $1,000,000 Labor cost = $50/hour Time to make 1 unit = 1 hour TC = $1,000,000 + (10,000,000) x (1hour/unit) x $50/ hour) = 1,000,000 + $50,000,000 = $51,000,000
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Foreign manufacturer: FC = $500,000 Labor cost = $10/hour Time to make 1 unit = 2 hours TC = $500,000 + (10,000,000) x (2 hours/unit) x $10/hour) = $500,000 + $20,000,000 = $20,500,000
Background image of page 6
    Problem Qs: How do we compete?
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Ans.: Stop imports. Pass a law!!!
Background image of page 8
    Problem Option 1: Reduce FC from $1,000,000 to $750,000 Union agrees to reduce labor cost from $50/hour to $30/hour TC = $750,000 + (10,000,000) + (1 hour/unit) x ($30/hour) = $750,000 + $30,000,000 = $30,750,000
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Option 1: $30,750,000 as compared to $20,500,000 from foreign manufacturer NOT GOOD ENOUGH !!!!!
Background image of page 10
    Problem Now what !!!!! Ban imports !!!
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Option 2: Reduce FC from $1,000,000 to $750,000 Union agrees to reduce labor cost from $50 / hour to $30 / hour Improve productivity: 1 hr/unit 0.65 hrs/unit TC = $750,000 + (10,000,000) + (0.65 hour/unit) x ($30/hour) = $750,000 + $19,500,000 = $20,250,000
Background image of page 12
    Problem Option 1: $20,50,000 as compared to $20,500,000 from foreign manufacturer WE DID IT !!!!! Conclusion: WE BEAT THEM !!!!!!
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem HOW did we beat them? By reducing cost; both fixed cost and labor cost. Improving productivity
Background image of page 14
    Problem Qs: Could we match foreign manufacturer without reducing our wages?
Background image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Problem Ans: What if we focused simply on improving productivity? What if we improved productivity and reduced the time to make one unit from 1 hour to 0.40 hours?
Background image of page 16
    Problem TC = $1,000,000 + (10,000,000) + (0.40 hour/unit) x ($50/hour) = $1,000,000 + $20,000,000 = $21,000,000 Compared to $20,500,000 from foreign manufacturer
Background image of page 17

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  Problem Qs: How do we improve productivity? Ans.: Work faster!!! Train employees Buy better/newer machines and equipment!!!! Better production systems and procedures
Background image of page 18
Image of page 19
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/31/2010 for the course GSC 3600 taught by Professor Verma during the Winter '10 term at Wayne State University.

Page1 / 58

Chapter 1 Intor to OM - Welcome ISM3600...

This preview shows document pages 1 - 19. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online