C 01 - Production (p. 4) Operations management (OM) (p. 4)...

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Unformatted text preview: Production (p. 4) Operations management (OM) (p. 4) Management process (p. 7) Services (1). 9) Solved Problems. ._ 1 Solved Problem 1.1. day, and each loig requires 3_ labor-hours to process. He believes that he can hire a professional buyer'th can-buy a betterjquality log at the same cost. If this is the case, he can increase his produc- tion to 260 crates per 100 logs. His labor-hours Will increase- by 8 - . hours per day. _ ' - r _ What will be the impact on productivity (measured in crates ' I per 1ahor~hour‘) if the buyer is hired? Solved Problem 1.0.2 ' Art Binley has decided to look at his productivity from a multifac- - tor (total factor productivity) perspective (refer to Solved Problem 1.1).. To do so, he has determined his labor, capital, energy, and material usage and decided to use dollars as the common denomi- nator. His total labor—hours arenow 300 per day and will increase madam. - ' Current System I Labor: _. ' r ' ‘ 300 hrs. @ $10 = $3,000 Material: " 100 Iogsl’day 1,000 Capital: 350 ' Energy: _ 150 - Total cost: $4,500- Multifactor productivity of current system: _ =240. crates/4,500 m .0533 crates/dollar " Pure service (p. 11) Service sector (p. 12) Productivity (p. 14) Single-factor productivity (p. 15) Productivity can be measured in a variety of ways, such as by _ labor, capital, energy, material usage, and so omAt Modern: 1; _.Lurnber,__1,nc._, Art Binley, president and producer of apple crates. - _ sold to growers, has been able, with his current equipment, to pro- .f duce240 crates per 100 logs. He currently purchases 100- logs per. Solved Problems Multifactor productivity (p. 15) Productivity variables (p. 17) Knowledge society (p. 18) Viul flice Hour hel I_ is availahe on tudet DVD. Solution»: 3' (a) I ' 240 crates C at] b'r uctivi =--_m—'-—+-'.—Z um? a 0 w: 100 iogs><3 hours/log ' .300 .= .8 crates per labor-hour 7‘ (b) ' Labor-productivity _ 260 Crates . ' ' with buyer _ (100 logs><3 hou-rsflog)+-8- hours ." " .._26.0. ' . 7362? -' i: .844 crates per labor-hour 21 Using current productivity (.80 from [alj as a base, the 7 increase will be 5.5% (.844/;8 =‘1.05.5, or a 5.5% increase). to 3.08 per day. His capital and energy costs will remain constant at $350 and $150 per day, respectively._Materia1 costs for the 100 . logs per day are $1,000 and will remain the same. Because he pays an average of -$ 10 per hour (with'fringes). Binley determines his I A productivity increase 'as follows: System ProfessionalBuyer $3,080 1,000 - 350 I 150 _ - $4,580 I Multifacto'r productivity of proposed system: = 260 crates/4,580 = .05 68'cratesldollar .308 hrs. @ $10.: 7 Using current. productivity (.0533) as a base-the increase Will be .066._That is, 0568/0533 ='1.06.6, or 316.6% increase. 2. 3. Chapter1 0 Operations and Productivity If he a Before taking the self-rest, refer to the learning objectives listed at the beginning of the chapter and the key terms listed at the end. of 1116- chemist: Use- the key at the back of the text to correct your answers. ‘ Restudy pages that correspond to any questions you answered incorrecin or material youfaci uncertain about. . OMjobs Constituto what percentage of all jobs? a) 20% h) 3.5% c) 18% d) 40% Productivity incrcasos whom a) inputs inoroaso while outputs remain the same, i“ inputs dcoreaso whilo outputs remain the same. - c) outputs. deorcasc while inputs remain the same. (1) inputs and outputs increase proportionately. e) inputs increase at- thc same rats as outputs. as i. The capital investment each year in tho U.S. usually-i a) decreases. it) remains constant. , “increases, 4. d) decreases unless favorably taxed, c) is very cyclical. Productivity incroasos cach year in the US. are the result of' three factors: >a£1abon Capital, management 1 2 3 - it 5. Visit our Companion Web site or use yo On Our Companion Web site, . Why should one study operations management? . Identify four people who have contributed to the theory and b) engineering, labor, Capital wwwLprenhull.com/heizer - Practice Problems. Self-Study Quizzes .' POM for Windows- Practice Problems Virtual Company Tour Power Point Lecture techniques of operations management. . Briefly describc the contributions of the four individuals identi— fied in the preceding question. . Figure 1.1 outlines. the operations, financclaccounting, and marketing functions of three organizations. Prepare a chart sim- ilar to Figure 1.1 outlining the same functions for one of the following: (a) a newspaper (b) a drugstore (o) a collcgc library (d) a summer camp (e) a small costumedcwclry factory Answer question 4 for some other organization, perhaps an organization where you have worked. 6. What are the three basic functions of a firm? 5. c) cnginocring, capital, quality control d) engineering, labor, data processing e) engineering, capital, data processing Which apocars to provide; the best opportunity for increases in productivity? ' a] labor 1).) capital management 6.. '7. (1) engineering When returns to labor, capital,_ or management are increased without increased productivity, priccs: ' risc. '- b) fall. c) stay the Sonic. (1) unable to determine. Problems in the measurement of productivity include: a) the unknown .efEcct of satirical clemeniS- b) the absence of precise units of measure. c) the offsets of quality over time. all of the above. 8. m" iudet CD—R On Your Student CD-ROM >990?" 10. 11. Tho persdn who introduced standardized, interchangealc parts was: a) Eli Whitney. b) Henry Ford. 8) Adam Smith. d) W. Edwards Ducting. e) Frcdorick W.Thylor. D with material in this chapter - ' On Your Student DVD 0 Video Clips and Video Case - Virtual Office Hours for Solved Problems Name the 10 decision areas of operations management. Name four areas that are significant to improving labor productivity. The U.S., and indeed much of the world, has been described as a “knowledge society.” How does this affect productivity mea- surement and the comparison of productivity between the US. and other countries? What are the measurement problems that occur when one attempts to measure productivity? Mass customization and rapid product development were idcn- tificd as current trends in modcrn manufacturing operations. What is the relationship, if any, between these trends? Can you cite any examples? - 12. What arcthc five reasons productivity is difficult to improve in 13. the service sector? Describe some of the actions taken by Taco Bell to increase productivity that have resulted in Taco Bell’s ability to serve “twice the volumc with half the labor.” . “as a - .-..,..~t..=_-,. " Major corporations with overseas subcontractors (such as Ikea in Bangladesh, Unilever in India, and Nike in China) have been crit- icized, often with substantial negative publicity, when children as young as 10 have been found working in the subcontractor’s facilities. The standard response is to perform an audit and then enhance controls so it does not happen again. In one such case, a I Problems"??- a 1.1 John Lucy makes wooden boxes in which to ship motorcycles. John and his three employees invest a total of 40 hours per day making the 120 boxes. at} What is their productivity? b) John and his employees have discussed redesigning the process . to improve efficiency. If they can increase the rate to 125 per day, what Will be their new productivity? 0) What will be their percentage increase in productivity and per— centage change? Px - 1.2 Riverside Metal Works produces cast bronze valves on a 10-person assembly line. On a recent day, 160 valves were produced during an 8—hour shift. Calculate the labor productivity of the line. PX _ - 1.3 This year, Benson, Inc., will produce 57,600 hot water heaters at its plant in Yulee, Florida, in order to meet expected global demand. To accomplish this. each laborer at the Yulee plant will work 160 hours per month. If the labor productivity at the plant is 0.15 hot water heaters per labor hour, how many laborers are employed at the plant? - 1.4 As a library 'or Internet assignment, find the US. pro— ductivity rate (increase) last year for the (a) national economy, (b) manufacturing sector, and (c) service sector. - 1.5 Lori produces “Final Exam Care Packages“ for resale by her sorority. She is currently working a total of 5 hours per day to produce 100 care packages. a) What is Lori’s productivity? b) Lori thinks that by redesigning the package, she can increase her total productivity to 133 care packages per day. What will be her new productivity? c) What will be the percentage increase in productivity if Lori makes the change? BK - v 1.6 Eric Johnson makes billiard balls in his New England plant. With recent increases in his costs, he has a newfound interest in efficiency. Eric is interested in determining the productivity of his organization. He- would like to know if his organization is maintain- ing the manufacturing average of 3% increase in productivity. He has the following data representing a month from last year and an equivalent month this year: mummies mm awwummnwmsmsmm Wmmmmkmem _ . Last. Year Now ' Units produced . 1,000 1,000 Labor (hours). 300 . 275 Resin (pounds) - 50 ' .45 - Capital invested (313) 10,000 11,000 Energy (BTU) 3,000 2,850. wwwmmmmvmm “.mmmmwmmtwmmwmrmmmmfimwfim datum *Note: I"filmeans the problem may be solved with POM for Windows and/or Excel OM. Problems 23 10—year—old was terminated. Shortly thereafter, the family, with- out the IO—year-old’s contribution to the family income, lost its modest home, and the 10-year~old was left to scrounge in the local dump for scraps of metal. Was the decision to hire the 10- year-old ethical? Was the decision to terminate the lOHyear-old ethical? Show the productivity percentage change for each category and then determine the improvement for labor—hours, the typical stan- dard for comparison. W ' ' 1.7 Eric Johnson (using data from Problem 1.6) determines his costs to be as follows: - Labor: $10 per hour ° Resin: $5 per pound - Capitai expense: 1% per month of investment - Energy: $.50 per BTU. Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis With dollars as the common denominator. 9)" ' 1.8 Kleen Karpet cleaned 65 rugs in October, consuming thefollowing resources: ' Labor: I cars at $13 per hour. ..S01V§I.ll;....' . . ' 100 gallons at $5. per gallon . Machine rental: ' 20- days at $50 per day 34%deWt'flzfltmmmWWfimiwflmmmmmmfimWW a) What is the labor productivity per dollar? b) What is the multifactor productivity? - - 1.9 David Upton is president of Upton Manufacturing, a producer of Go-Kart tires. Upton makes 1.000 tires per day with the following resources: Labor: ' I 400 hours per day @ $12.50 per hour Raw material; 20,000 pounds per day @ $1 per pound Energy: ' $5,000 per day ' Capital; $10,000 per day FWWW WWs {.mimwkamwmmmwmmwnmmm a) What is the labor productivity per labor-hour for these tires at Upton Manufacturing? b) What is the multifactor productivity for these tires at Upton Manufacturing? _ - c) What is the percent change in multifactor productivity if Upton can reduce the energy bill by $1,000 per day without cutting pro- duction or changing any other inputs? 7 -- 1.10 Sawyer‘s, a local bakery, is worried about increased costs—particularly energy. Last year’s records can provide a fairly good estimate of the parameters for this year. Judy Sawyer, the owner, does not believe things have changed much, but she did invest an additional $3,000 for modifications to the bakery’s ovens to make them more energyiefficient. The modifications were sup— posed to make the ovens at least 15% more efficient. Sawyer has asked you to check the energy savings of the new ovens and also to look over other measures of the bakery‘s productivity to see if the Chaptar 1 - Operations and Productivity with: WW....,.,,,,..m.....s“new.was Production (dozen) 1,500 Labor (hours) 350 Capital investment (:19) 15.000 Energy {BTU) 3,000 i 'I_'_?;:.$;: -.-, s more use ». a -__1 ..-:»-.:s: H 1.11 Cunningham Performance Auto, Inc., modifies 375 autos per year. The manager, Peter Cunningham, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the fol— lowing data. Resource inputs were: labor, 10,000 hours; 500 sus- pension and engine modification kits; and energy, 100,000 kilowatt- hours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Cunningham? EEK n - 1.12 Lake Charles Seafood makes 500 wooden packing boxes for fresh seafood per day, working in two 10uhour shifts. Due to increased demand, plant managers have decided to operate three 8—hour shifts instead. The plant is now able to produce 650 boxes per day. Calculate the company’s productivity before the change in work rules and after the change. What is the percent increase in pro- ductivity? Ea Nto'nal Air Exprs '- National Air is a competitive air-express firm with offices around the country. Frank Smith, the Chattanooga, Tennessee, station man— ager, is preparing his quarterly budget report, which will be pre- sented at the Southeast regional meeting next week. He is very con- cerned about adding capital expense to the operation when business has not increased appreciably. This has been the worst first quarter he can remember: snowstorms, earthquakes, and bitter cold. He has asked Martha Lewis, field services supervisor, to help him review the available data and offer possible solutions. - - - 1.13 Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% in the last year. On far too many occasions, cus- tomers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens dif- ferently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. If the bakery makes 1,500 loaves per month with a labor productivity of 2.344 loaves per labor-hour, how many workers will Lackey need to add? (Hint: Each worker works 160 hours per month.) 0 o 1.14 Refer to Problem 1.13. The pay will be $8 per hour for employees. Charles Lackey can also improve the yield by purchasu ing a new blender. The new blender will mean an increase in his investment. This added investment has a cost of $100 per month, but he will achieve the same output (an increase to 1,875) as the change in labor hours. Which is the better decision? a) Show the productivity change, in loaves per dollar, with an increase in labor cost (from 640 to 800 hours). 4’ “ b} Show the new productivity, in loaves per dollar,Awith only an increase in investment ($100 per month more). c) Show the percent productivity change for labor/and investment. 1.15 Refer to Problems 1.13 and 1.14. If Charles Lackey’s utility costs remain constant at $500 per month, labor at $8 per hour, and cost of ingredients at $0.35 per loaf, but Charles does not pur- chase the blender suggested in Problem 1.14, what will the productiv— ity of the bakery be? What will be the percent increase or decrease? '- 1.16 In December, General Motors produced 6,600 cus- tomized vans at its plant in Detroit. The labor productivity at this plant is known to have been 0.10 vans per labor—hour during that month. If 300 laborers were employed at the plant that month, how many hours did the average laborer work that month? - - 1.17 Natalie Attired runs a small job shop where garments are made. The job shop employs eight workers. Each worker is paid $10 per hour. During the first week of March, each worker worked 45 hours. Together, they produced a batch of 132 garments. Of these garments, 52 were “seconds” (meaning that they were flawed). The seconds were sold for $90 each at a factory outlet store. The remain- ing 80 garments were sold to retail outlets at a price of $198 per gar— ment. What was the labor productivity, in dollars per labor-hour, at this job shop during the first week of March? Service Methods National Air offers door-to~door overnight air-express delivery within the US. Smith and Lewis manage a fleet of 24 trucks to handle freight in the Chattanooga area. Routes are assigned by area, usually delineated by zip code boundaries, major streets, or key geographical features, such as the’Tennessee River. Pickups are generally handled between 3:00 PM. and 6:00 P.M., Monday through Friday. Driver routes are a combination of regularly scheduled daily stops and pick— ups that the customer calls in as needed. These call-in pickups are dis- ...
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C 01 - Production (p. 4) Operations management (OM) (p. 4)...

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