Productivity Fundamental Questions

8/12/2019 Productivity Fundamental Questions

1/6

Mgmt 120

Management of Operations

Problem Review for Unit 1 - Fundamentals

This section contains study problems for the following topics.

Time, Rate, and Productivity

Inventory Measures

Answers for all the problems are found in the back of this section.

Review problems for Fundamentals


2/6

Review Problems for Fundamentals

1. A 3 person crew of telemarketing employees made 200 phone calls in a 4 hour timeblock. What was their individual average productivity in calls per hour? What was thecrew productivity?

2. In an assembly operation at a furniture factory, six employees assembled anaverage of 450 standard dining chairs per 5-day week. What is the labor productivity ofthis operation?

3. The weekly output of a fabrication process is shown below together with data forlabor and material inputs. Standard selling price is $125 per unit. Overhead is charged ata rate of $1500 plus .5 times direct labor cost. Assume a 40 hour work week and anhourly wage of $16 per hour. Material cost is $10 per linear foot. What is the multifactorproductivity?

Output (units) Number of workers Material (ft)392 5 2720

4. A company has introduced a process improvement that reduces processing time foreach unit so that output is increased by 25% with less material but one additional workerrequired. Under the old process, five workers could produce 60 units per hour. Laborcosts are $12/hour and material input was previously $16/unit. For the new process,material is now $10/unit. Overhead is charged at 1.6 times direct labor cost. Finishedunits sell for $31 each. What increase in productivity is associated with the processimprovement? (Use a per-hour cost basis)

Time, Rate, and Productivity - 1


3/6

Review Problems for Exam 1

5. Compute time and rate for each of the following.a. 10 customers are served in 2 hours

b. a machine can process 296 parts per hour

c. it takes 37 minutes to process a loan application

d. Three employees each spent 4 hours and altogether they cleaned 8 apartments.

Time, Rate, and Productivity - 2


4/6


6. Joan Pontius, the materials manager at Money Enterprises, is beginning to look forways to reduce inventory. A recent accounting statement shows inventories at thefollowing levels.

Raw materials: $2,345,000Work-in-progress: $5,670,000Finished Goods: $2,161,000

This year's cost of goods sold should be about $29.4 million. Assuming 52 businessweeks per year, express total inventory as:

a. weeks of supply

b. inventory turns

7. One product line is experiencing 7 turns per year, and its annual sales volume (atcost) is $750,200. How much inventory is being held, on the average?

8. MINC, Inc. keeps 4 items in stock, three machines and a repair kit. The currentinventory level and last years demand are shown below along with the value of the items.(Assume 52 weeks per year.)

Last year'sdemand

Currentlyon hand

Valueof item

Model 1 17,000 2500 $200Model 2 15,000 1500 $300Model 3 8,500 2000 $150Repair kits 450 100 $24.00

a. How many weeks of supply do they currently have on hand?b. If the current inventory level is characteristic, how many turns per year does MINC

Inc. have? Answers:

Answers - 3


5/6

Review Problems for Exam 1

1. individual: = = 16.7 calls/hr

crew: = 50 calls/hr

2. = = 15 chairs/day

3. Labor cost = 40 x 16 x 5 = 3200

multifactor productivity =

= = = 1.46

4. Use a per hour cost basis.

Old method: labor cost = $12/ worker x 5 workers = $60/hr

prod. = = = 1.667

New method: labor cost = $12/worker x 6 workers = $72 / hr

prod. = = = 2.48

Improvement in productivity = = 48.8%

5. a. time = 12 minutes per customer or .2 hours/customer rate = 5 customers/hr or .08333 customer/s per minute b. time = .0034 hrs per part or .203 minutes per part rate = 296 parts/hr or 4.933 parts per minute c. time = 37 minutes per application or .617 hrs/app rate = 1.62 apps/hr or .027 apps/min. d. time = 1.5 hrs/apt or 90 min/apt rate = .667 apts/hr or .011 apts/min

6. average aggregate inventory value = $10,176,000weekly sales = = .565 mill/week

weeks of supply = = 17.99 18 weeks of supply

inventory turns = = 2.89 2.9 turns per year

7. turns =

7 =

Thus ave. aggr. inventory value = = 107,171 107,0008.

Last year'sdemand

Currentlyon hand

Valueof item

Value onhand

Yearlyvalue in

salesModel 1 17,000 2500 $200 $500,000 $3.4 millModel 2 15,000 1500 $300 $450,000 $4.5 mill

Answers - 4


6/6


Model 3 8,500 2000 $150 $300,000 $1.275mill

Repairkits

450 100 $24.00 $2400 $.0108mill

Ave. aggr. inventory value = $1.2524 mill.Annual sales = $9.185 mill.weekly sales = = $.176650 mill

weeks of supply = = 7.09 7 weeks of supply

turns = = 7.33 turns per year

Answers - 5

Documents

Productivity Fundamental Questions