43590784 Ch01 OM Productivity | Labour Economics | Capital (Economics)

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http://wps.prenhall.com/bp_heizer_opsmgmt_8/34/8939/2288590.cw/index.html Practice Problems: Chapter 1, Operations and Productivity Problem 1: Mance Fraily, the Production Manager at Ralts Mills, can currently expect his operation to produce 1000 square yards of fabric for each ton of raw cotton. Each ton of raw cotton requires 5 labor hours to process. He believes that he can buy a better quality raw cotton, which will enable him to produce 1200 square yards per ton of raw cotton with the same
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  1 http://wps.prenhall.com/bp_heizer_opsmgmt_8/34/8939/2288590.cw/index.html  Practice Problems: Chapter 1, Operations and Productivity Problem 1:  Mance Fraily, the Production Manager at Ralts Mills, can currently expect his operation to produce 1000 square yards of fabric for each ton of raw cotton. Each ton of raw cotton requires 5labor hours to process. He believes that he can buy a better quality raw cotton, which will enablehim to produce 1200 square yards per ton of raw cotton with the same labor hours.What will be the impact on productivity (measured in square yards per labor-hour) if he purchases the higher quality raw cotton? Answer: 1000 sq ydsCurrent labor productivity = 200 sq yds per hour 1 ton*5 hours !    Ne labor productivity =1200 sq yds1 ton*5 hours240 sq yds per hour  !  Productivity improves 20% = ( 240 - 200 ) / 200 = .2 Problem 2:  . A. Ratchet, the local auto mechanic, finds that it usually takes him 2 hours to diagnose and fixa typical problem. What is his daily productivity (assume an 8 hour day)?Mr. Ratchet believes he can purchase a small computer trouble-shooting device, which willallow him to find and fix a problem in the incredible (at least to his customers!) time of 1 hour.He will, however, have to spend an extra hour each morning adjusting the computerizeddiagnostic device. What will be the impact on his productivity if he purchases the device? Answer:   urrent productivity8 hours per day2 hours per problemproblems per day ! 4   Productivity with computer 7 hours per day1 hour per problemproblems per day ! 7   74 3Productivity improves 75% .7544 ¨ ¸! !© ¹ª º    2 Problem 3:  Joanna French is currently working a total of 12 hours per day to produce 240 dolls. She thinksthat by changing the paint used for the facial features and fingernails that she can increase her rate to 360 dolls per day. Total material cost for each doll is approximately $3.50; she has toinvest $20 in the necessary supplies (expendables) per day; energy costs are assumed to be only$4.00 per day; and she thinks she should be making $10 per hour for her time. Viewing this froma total (multifactor) productivity perspective, what is her productivity at present and with thenew paint? Answer: Currently Using the new paint   Labor 12 hrs * $10 $120 12 hrs * $10 $ 120Material 240 * $3.50 $840 360 * $3.50 $1260Supplies $ 20 $ 20Energy $ 4 $ 4Total Inputs $984 $1404Productivity 240/984 0.24 360/1404 .26 Problem 4:  How would total (multifactor) productivity change if using the new paint raised Ms. French¶smaterial costs by $0.50 per doll? ANS: If the material costs increase by $0.50 per doll: Using the new paint  Labor 12 hrs * $10 $ 120Material 360 * $4.00 $1440Supplies $ 20Energy $ 4Total Inputs $1584Productivity 360/1584 0.23  3 Problem 5:  If she uses the new paint, by what amount could Ms. French¶s material costs increase withoutreducing total (multifactor) productivity? Answer:  From the answer to Problem 3 we know the following: Currently Using the new paint   Labor 12 hrs * $10 $120 12 hrs * $10 $ 120Material 240 * $3.50 $840 360 * $3.50 $1260Supplies $ 20 $ 20Energy $ 4 $ 4Total Inputs $984 $1404Productivity 240/984 0.24 360/1404 .26We want to know how high the material cost could go, using the new paint, before the productivity drops to the current level of 0.24. In mathematical terms we make the material costa variable (  X  ), set the new multifactor productivity value to the current level, 0.24, and solve for   X  .360/(($12x10) + 360 $(  X  ) + $20 + $4) 0.24360 0.24($120 + 360$(  X  ) + $20 + $4)360 $28.8 + 86.4$(  X  ) + $4.8 + $.96325.44 86.4$(  X  )$(  X  ) 325.44/86.4 $3.7666 $ $3.77It follows then that the new paint could raise Materials cost by no more than approximately$0.27 (the difference between $3.77 and $3.50) before Ms. French would experience a decreasein multifactor productivity.  4 1. The father of scientific management is   Your Answe r:   Frederick W. Taylor   2. The three major business functions necessary to all organizations are   C orr ect Answe r:   marketing, finance/accounting, operations   3 . The service sector constitutes what percentage of employment in the UnitedStates?   C orr ect Answe r:   76.7%   4 . OM jobs constitute what percentage of all jobs?   Your Answe r:   40%   5. The systematic processing of data to yield information is a part of    C orr ect Answe r:   information sciences   6 . Productivity increases when   Your Answe r:   inputs decrease while outputs remain the same   7. The capital investment each year in the United States usually   C orr ect Answe r:   increases   8 . Productivity increases each year in the United States are the result of threefactors   Your Answe r:   labor, capital, management   9. Which appears to provide the best opportunity for increases in productivity?   C orr ect Answe r:   management   11. Organizations that produce something other than physical products are called   Your Answe r:   service organizations   1 3 . An insurance adjuster processes the claims of six policy holders in an eighthour work day. The adjuster uses $5 in gasoline and $3 in forms and officesupplies to complete the work. What is her labor productivity?   Your Answe r:   0.75 claims per hour   1 4 . Two car wash employees are paid $7.50 an hour each and are capable of washing 12 cars per hour, using $1 of water and $2 of soap and othercleaning supplies. What is the multifactor productivity of this operation?   Your Answe r:   0.66 cars per dollar   15. When a tangible product is not included in the service, it is called   C orr ect Answe r:   a pure service   17. Increases in productivity are difficult to achieve if    Your Answe r:   the task is more intellectual and personal  
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