Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2CTE
Summary Introduction
To explain: The factor which causes productivity figures to be misleading and suggest any other method to compare two plants which would be meaningful.
Introduction: Competitiveness, strategy making and productivity are three crucial aspects for a firm to withstand and succeed in present competitive business environment. These elements are interrelated which must be handled efficiently in order to attain competitive edge.
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A U.S. company has two manufacturing plants, one in Michigan and one in Toluca, Mexico. Both produce the same item, each for sale in their respective countries. However, their productivity figures are quite different. The analyst thinks this is because the Michigan plant uses more automoted equipment for processing while the other plant uses a higher percentage of labor. Explain how that factor can cause productivity figures to be misleading. Is there another way to compare the two plants that would be more meaningful?
Cooling Fan Manufacturing started in year 2015. They spend $200,000 total cost to make
the shipment including Labor, Materials, Capital Cost and other expenses. They sold the
merchandise for $300,000. After 5 years, in year 2020 the expenses double up to $400,000
and the sales also gone up to $1,000,000. Compute the Productivity of Cooling Fan
Manufacturing in year 2015 and year 2020. Compare the two scores and Explain what are
the possible reason behind.
A factory produces 14,000 desk staplers each week. The equipment used costs $50,000 and will remain productive for four years. The labor cost
per year is $190,000.
a. What is the productivity measure of "units of output per dollar of input" averaged over the four-year period? Assume that there are 52 weeks
per year. Round your answer to two decimal places.
units of output per dollar input
b. We have the option of buying $55,000 of new equipment, with an operating life of seven years. It would reduce labor costs to $124,000 per
year. Should we consider purchasing this equipment (using productivity arguments alone)? Assume that there are 52 weeks per year. Round
your answer for productivity to two decimal places.
For the newer machine, the productivity is
-Select-, it would be a-Select- investment.
-Select-
higher
lower
units of output per dollar input. Because the productivity of the new machine is
Chapter 2 Solutions
Operations Management
Ch. 2.7 - Prob. 1.1RQCh. 2.7 - Prob. 1.2RQCh. 2.7 - Prob. 1.3RQCh. 2.7 - Prob. 2.1RQCh. 2.7 - Prob. 2.2RQCh. 2 - Prob. 1DRQCh. 2 - List the key ways that organizations compete.Ch. 2 - Prob. 3DRQCh. 2 - Prob. 4DRQCh. 2 - Prob. 5DRQ
Ch. 2 - Contrast the terms strategies and tactics.Ch. 2 - Contrast Organization and operations strategy.Ch. 2 - Prob. 8DRQCh. 2 - Prob. 9DRQCh. 2 - Prob. 10DRQCh. 2 - Prob. 11DRQCh. 2 - Prob. 12DRQCh. 2 - Prob. 13DRQCh. 2 - Prob. 14DRQCh. 2 - Prob. 15DRQCh. 2 - Who needs to be involved in formulating...Ch. 2 - Prob. 2TSCh. 2 - Prob. 3TSCh. 2 - Prob. 1CTECh. 2 - Prob. 2CTECh. 2 - Prob. 3CTECh. 2 - Prob. 4CTECh. 2 - Prob. 5CTECh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - A company offers ID theft protection wing leads...Ch. 2 - Prob. 1.1CQCh. 2 - Prob. 1.2CQCh. 2 - Prob. 1.3CQCh. 2 - Prob. 2.1CQCh. 2 - Prob. 2.2CQCh. 2 - Prob. 2.3CQCh. 2 - Prob. 2.4CQCh. 2 - Prob. 2.5CQCh. 2 - Prob. 2.6CQCh. 2 - Prob. 2.7CQCh. 2 - Prob. 1OTQCh. 2 - Prob. 2OTQCh. 2 - Prob. 3OTQCh. 2 - Prob. 4OTQCh. 2 - Prob. 5OTQCh. 2 - Prob. 6OTQCh. 2 - Prob. 7OTQ
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- A company has collected the data as shown in the table below for the factories it operates. The plants are of similar size and capacity. All data are in thousands of US$. Calculate the labor, capital and multifactor (including, labor, capital and materials) productivity for each plant for all years. Using the data in the table, plot plant A’s and B’s labor productivity on the same graph. Using the data in the table, plot plant A’s and B’s capital productivity on the same graph. Using the data in the table, plot plant A’s and B’s multifactor productivity on the same graph. Evaluate each factory’s performance overtime both independent of the other factory and relative to the other factory, what would you recommend? West Bank Factory Gaza Strip Factory Year Sales Labor Capital Materials Sales Labor Capital Materials 2010 3480 178 870.5 1780 3510 180 878 2080 2011 3790 191 967 2030 3820 195 1023 2060 2012 4030…arrow_forwardA U.S company has two manufacturing plants, one in the United State and one in another country. Both produce the same item, eachfor sale in their respective countries. However, their productivity figures are quite different. The analyst thinks this is because the U.S. plant uses more automated equipment for processing, while the other plants uses a higher percentage of labor. Expalin how that factor can cause productivity figures to be misleading. Is there another way to compare the two plants that would be more meaningful?arrow_forwardTwo types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours are given below. QUANTITY $/UNIT $ 9,050/car $10,550/car Deluxe car 3,625 units sold 6,525 units sold 22,750 hours 29,865 hours Limited car Labor, Deluxe Labor, Limited $ 12/hour $ 15/hour What is the labor productivity for each car? Provide two sets of figures: units per labor hour, and dollar of output per dollar of labor expense. (Round your answers to 2 decimal places.) Labor Productivity Units/hour Dollars Deluxe car Limited cararrow_forward
- Mazen is a manager in a factory producing fabrics. In 2020, the daily production target was met in terms of quality and quantity. But, this target was achieved as a result of an increased number of workers and import of high quantities of cotton and piles of leftovers, meaning an extra inputs' costs. He decided to make negotiations with local industries to sell them cotton remnants to be recycled and re-used in pillow manufacturing.The productivity of this factory is: * Effective and efficient Neither effective nor efficient Effective but not efficient O Not effective but efficientarrow_forwardA hamburger factory produces 45,000 hamburgers each week. The equipment used costs $13,000 and will remain productive for four years. The labor cost per year is $12,000. a. What is the productivity measure of "units of output per dollar of input" averaged over the four- year period? Assume that there are 52 weeks per year. Round your answer to one decimal place. hamburgers/dollar Productivity: 153 b. We have the option of $15,000 equipment, with an operating life of five years. It would reduce labor costs to $9,500 per year. Should we consider purchasing this equipment (using productivity arguments alone)? Assume that there are 52 weeks per year. Round your answer for productivity to one decimal place. For the expensive machine, productivity is the productivity of the expensive machine is investment based on this single criterion. lower 187 hamburgers/dollar input. Because it would be a badarrow_forwardA factory produces 7,500 units of car replacement component per month which can be sold at the price of $50/unit. The monthly labor cost is $1,050, material cost is $5,200, and overhead cost is 15% of the material cost. Compute the different productivity measure you can conclude, and specify who may be interested in each measure.arrow_forward
- A fast-food restaurant serves hamburgers, cheeseburgers, and chicken sandwiches. The restaurant counts a cheeseburger as equivalent to 1.25 hamburgers and chicken sandwiches as 0.8 hamburger. Current employment is i ve full-time employees who each work a 40-hour week. If the restaurant sold 700 hamburgers, 900 cheeseburgers, and 500 chicken sandwiches in one week, what is its productivity? What would its productivity have been if it had sold the same number of sandwiches (2,100), but the mix was 700 of each type?arrow_forwardProblem 2 You have just been given the following production data for 2010 and 2011. Calculate the total productivity measure and the partial measures for labour, capital, energy, and raw materials for both years. 2010 $400,000 $50,000 $100,000 $8,000 $60,000 Output: Input: Sales Labour Capital Energy Raw Materials Comment about the productivity of the company. 2011 $480,000 $60,000 $110,000 $9,500 $80,000arrow_forwardWhat do we mean when we say productivity is a relative measure?arrow_forward
- Pak Andi is a director of a cake factory in the Bekasi area. To produce 900 cakes per day it takes the following things: Labor 300 hours per day @ $ 96 per hour Raw material 3 tons per day @ $ 2 per kg Energy $ 10,000 per day Capital cost $ 5,000 per day a. What is the labor productivity per labor-hour for the production of cakes at the factory?b. What is the multifactor productivity for cake production at the factory?c. If Mr. Andi wants to increase his production to 1,500 cakes per day without changingother variables, what is the productivity now?arrow_forwardUse the following to answer questions 21 and 22. A shoe factory owner plans to open two new shoe factories in a few months. These factories will be opening in the same city. The owner wants to find out whether a biweekly pay cycle increases productivity compared to a weekly pay cycle. So the factory owner decides he will open one of the two factories using a weekly pay cycle, and the other using a biweekly pay cycle, then he will compare productivity levels between the two factories 6 months after they start production. In the above example, what is the independent variable? a.) Location of the factories. b.) Productivity levels after 6 months. c.) Pay cycle. d.) There is no independent variable. In the above example, what is the dependent variable? a.) Location of the factories. b.) Productivity levels after 6 months. c.) Pay cycle. d.) There is no dependent variable.arrow_forwardPlease use the fewest words necessary to define the phrase "balanced scorecard." What connection does it have to a company's operations?arrow_forward
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