CHAPTER 1 OPERATIONS AND PRC)DIJClrrvlI

Solved Problems VirtUal Off Hours help Is available at wwwmyorrlabcom

r~ii~~m~1s~red~~ V~i~t~o~a~S~~h~~y ~~~~IO~N---- 240 ltDtes

j abor capital entrgy material usage and so on At Modern

Lumber Inc Art linley president and producer of apple C11leS sold 10 growers bas been able with hi current equipmiddot

i montto produce 240 erales per 100 logs H current ly pur ehAseslOO logs per day and each log requires 3labormiddothours to I pi He believelt that h can hire a professional buyer who

eao buy a beltermiddotquahty log allb same cost If this i the case II

he can IIlcrease hi production to 260 crates per 100 logs His lbormiddoth u will increase by 8 hours per day

Whal wiu be the impact on productivity (measured in crates bull per labormiddothour) if the buyer is hired1

1

IArt Dinley has decided to look ot his productivity from mulmiddot I tifaelor (tolll factor productivity) perspective (rfer to SolvedIProblem 11) To do so he has determined his labor capital I ltnltI1Y and material usaie and decided to use dollars as the commiddotIIllOD denorrunator His totall~bormiddotbours are nOw 300 per day

SOLUTION

I labor 300 rs 010 = 3000

i

CpItal E9

100 IogsIdiy 1000 350

i 10lA1Case S4SOO

Multifactor productivity ofcumDI system

I - 240 crates S4500 = 0533 cratesdoDar I

(a) Current labor productivity = =---=-=shy100 logs X 3 240

-bull - 300

(b) Labor productivity - liini~~=~i~wllh buyer (

a 844 crates per latlOrmiddotmiddotbOur

Using =t productivity (80 from [araquo as a crease will be 55 (84418 = 1055 or a 55

1I ----------~-------------------------------SOLVED PROBLEM 12 and will increuc 10 301 per day His capital and remain eooslaDtal $3~ and 5150 per day relpecti~ COSIS for the 100 lop per day are 51000 and Because he pays ao avaap ofS I 0 per hour (with determine his productivity increase as follows

308 his 010 - ntl8O 1000

350 150

Multif8Clor prodoctMtyofproposed )1tem = 260 crntesS4S80 = 0568 cratesdollar

I

t I

I UliDgcurrent productivity (0533) as 8 base the increase WIll be 066 That is 056811533 1066 or a 66 100_1 I bullbullbullbullbullbullbullbull bull _ bullbull~ _ bull bull bullbull ___ bullbullbull --- bullbullbullbullbullbullbull h _ __ __~_________ ~

Problems Note p lhe ptoIlIem may be 8OIed wilh POM for Wi1dows_EltOIIIQtI bull _ 11 Lori Cook produces Final Exam Care Package fortil by ber sorority She is currently workiDg a total of 5 houn pcJdAy to produce 100 ca packages I) What is Locis producuvity7 b) Lori tblnks thaI by redeianing the package she caD increase

her 1Olampl productivity to 133 care pacuges per day What wiD be her new productivity

c) What will be the perceotage increase in productivity if Lori kCllhe change Pi

r Chuck Sox makes wooden boxes in which to hip ~Ies Chuck and his tbree employees invest a total of 40 hours per day makong the 120 boxe bull a) Wbat is their productivity b) Chk and his employees have discusscd redesigning the promiddot

Cd$ to improve efficiency If they can increase the rllte to 125 per day what will be their new productivity

) What will be their unit inreGSlt in productivity per hour d) W will be their percentage change in productivity

his yer Donnelly Inc will produce 57600 bot c at its plant in Delaware in order to meet expected

global demand Tompliah this each work 160 boWl pcr_tblCtbc labor is 015 bot water -teal per Iabormiddothour emp~tlbe p1alIf

bull ~Car~~~produces a 100petSOn asoeaibfl JiIL g ~t duecd during ao~ a) Calculate the ~ lin- or tile b) John Goodale u r at

layout and w~1 8middothour Un~JIi~ labor hour

c) What is tbe peloiIiiibiil~~iIIIIlctI~IYl

111

51 ART 1 INTRODUCTION TO O PERATIONS MANAGEMENT

dnntl that montb 300 laborrs were em ployed t Ihe plant lba(alnth a) Hiw many hours did the average laborer work that month b) Jf productivity can be increased to 01 1 vans per labor-bou r ~many bours would lbe average laborer wor tbat month

f Oeorge Kyparisi makes bearing ball in hi Miami plant With rtccnt increases in his costs he bas a newfound intenlst in efficiency George is interesled in determining the productivi ty of hlo orsaoibullbulllIon H would tike to know if his orp aizrilion is maintaining the manuJacturing average of 3 iDc in productivity pe r year H bas the following data repreteDting mOnth from 3S1 year and an equivalent month thi

_- ui)l i[Afl J

~pocluc 1000 looD

tabor (hours) 300 17S -

Rllt1n (pounos) 50 4S CpilOllnltSled IS) 10000 11000 ----

Energy (BTU) 3000 18S0

ShOw the productivity percentage change for each category and tben determine the improvement for labor-hours the typical stODdard for comparison

Oeorge Kyparisi8 (using da ta from Problem 17) e his cos~ to be as follows~r SIO per hour bull

bull Juilf S 5 per pound bull UJpital txpellJe 10 pe-T mont 11 or investment bull Energy $ SO per BTU

Show the perocnt change in productivity for one mon th lat yoar YCmU Ooc month this year on a multifactor basis with dollars as tb~on denominator Ptshy

middot t LiUian Fok is president 09fiont Manufacturing a r of bicycle ures Fok make 1000 ti) per day with the following resources

400 hours PO do 0 11250 per _~l 10000 poIIlds por day C II per pound

15000 por dy -~ 110000 rr day

aJ What i the labor productivity per labor-hour for Ihese tires at Lakefront Manufacturing

bJ Wha i the multifactor productivity for these tires at _ Lakefront Manufacturing

c) What is the percent chango in multlfaclor productivity if Fok can reduce the energy bill by $1000 peT day without cutting production Or changing any other inputs Px

1 to KJeen Karpet cleaned 65 rugs in October consuming tbe following resources

I lbot bull Sofvent

M6chine rental

SIO rs t S13 pot hour

100 gall it SS PO g11on

20 daIS 01 SSO IfOI day

a) What is the labor productivity per dollar b) What is the multifactor productivily P

bull bull - 111 Browns a local bakery is worried about increased costs--particularlyenergy Last years records can provide a fairly good estimale of the parameters for this year Wende Brown Ihe owner does nOI befieve things have cbanged mucb buuhe did inl an additional $3000 for modifications to Ihe bakery OvltllS to make them more energy efficient The modifications were supposed to make the ovens at least 15 more cfficienl Brown bas 3$ked you to check the energy savings of the new OVCJI$ and also to look over other measures of the bakerys productivity to see If the modificashytions were beneficial You have the followiogdata 10 work with

3S0 m Cpitallrment (I) ISOOO 18000

Energ1(BTU) 3000 2750

--~ -

bull Munson Performance Auto [ncbull modifies 375 autos per

)elilt--JI(e miinager Adam Munson is interested in oblllining a measshyure of overall performance lie bas asked you to provide him wilh bull multifactor me(lsure of last year performance as a benchmark for future comparison You have assembled the following data_ Resowu inputs were labor 10000 hours SOIl suspension and engine modifICashytion kiLO and energy 100000 kilowatt-bourS Average labor cost 11 ya yas $20 per hOUT kits cost $1000 each and energy COSts were S3 per tt-hour What do you tell Mr Munson1~

bull middot 113 Susan William runs a mtall flagstaff job shop where rm are made The job hop employs eight workers Ech

worker is paid $10 per hour Durin the flTSt week oC March each worker worked 45 hours Tosether they produced a batch of 132 gannents Of these garments 52 were 14secoods (meaning thallhey were flawed) The seconds wert sold for $90 eacb at a ractory outlet store The remaining 80 ganntmts were sold to retail outlets at n prite of$19 armen What was the labor productivity in dollrs per labor-hour t this job shop during the fi rst week of March

bull 114 ake Charles Seafood makes 500 wooden packing oxes for fresh seafood per day working in two 10-hour shifts

Due to increased demand plant managers have decided to opershyate three 8-hour shifts instead The plant is now able to produce 650 boxes per day a) Calculate the companys productivity before the change in

work rules and after the change

b) What is the pertentago increaslt in productivity 0) If production i mcreased to 700 boxe per day what is the

new productivity P

bull115 Chari lackey operates a bakery in Idaho Falls Idaho Illaquoause or il excellent produotand oeUltnt loction demand has iocrwed by 25 in tho last yUr On far too many occaltions cusshytome have not been able to purchase the bread or tbeir choire Bctause or the size or the store~ no new ovens can be added At a I1gtlT ting one employee suggested ways to load lbe ovens difshy(ltItlltly thaL more loaves of bread can be baked 8t onetime This llfOCSSwili requirc thal the ovens be landed by hand requiring additional manpower This is the only lbiDg to be changed If the bakltry makes 1500 loaves per month with bull labor productivity of 1344108 per labor-hour how many workers wiU Lackey need to aM(Hinlmiddot Each worker worllts 160 hours per month)

ttS Refer to Problem 115 The pay will be sa per hour for employees Charles Lackoy can also improve the yield by pur-

CHAPTER 1 I OPERATIONS AND PRODUCTIVITY 59

chasing a new blender The new blender will mean an liletease in his investment This added investment has a cos or SlllO per month but he will achieve the same output (an increase to 1875) as the change in labor-hours Which is the beller d~ ) Show the productivity change in loav per dollar with an

increase in labor cost (from 640 to 800 hours) b 1gthow the new productivity in loaves per dollar with GIlly an

ina-ease in investment ($100 per month more) c Show the percltnt productivity cbilf)ge for labor and inL

bullbullbull tt7 Refer to Problems 15 and 11 6 If Charles ~ey utility COSts remain constant at S500 per month labor 8lS8 per hour and cost of ingredients at $035 per loar but ChaI1lt does not purchase the blender suggested in Problem 116 w~1Ib the productiVity of the bakery be What will be the pe~fiteasc or decrease

Rerr to MyOMLb for this addi tional homework prob_i18

CASE STUDIES r Norwegian Salmon Processing facility Trondheim

NorSaJ Trondheim operatcs a salmon processing facility fish are pUlthIlSCd [rom local SOUrces along the North Sea processed at the (acllity anlt old to SIOOlCJS for distribution The plant manager I HbSCn is contemplating a planl modernization to upgrade the ltclugtlogy in the plant While the plan performs well eoough oow modemiling eqwpment would allow lhe plant to iDcrease capacity pltr hour which i particularly advantageous because the factory hils C2I01Igb demand o cover the additional capacity Curreotly the plant opc1les 5 days week in tWO shifts of 30 workers per shift The workers are paid $ 10 per hour Adding a third shift i nOt possible bltQu the plant netds 10 be cleaned during this time

The firm is tODtempJating 11 plant modemil2Uion to upgrade cxiSlln1l equipment wh ich should increase the plants outpul while IDWltflng eltBy laquoraquots Uing he current equ ipment around 1500 pmutd$ or salmon cln be processed each hour while the new plant _ld be able to process 2000 pounds per hour The updated equipshyIIICIlI is made by the same manufil(lUrer as the existing equipment and me production personnel r1 that they will be able to Icarn 0 Ug 1M- new equipment quiGkly For this JCIion costs to train pershywnnel Are assumed to be negligible The production manager Bjorn PclkrscA is skeptical about Ute benefit of the plant modernization

The older equipment he argues is lrendy paid for ancl~tpshymen would cost SIOOOO per week This 0 includes and iD~ as well as manufacnrrer installation of the The controUer Maret Karlbull bull utions thot all decisi rosts should lie included in he analysis and thlIt the CODSUntJltiOD of the new equipment mutt elso be the decision Eoelamp) COSIS are presently $10 per urut ing plant uses 1000 units of eneQlY per week With plan~ the consumption of energy would faIl by 50

Discussion Questions 1 Wharis the productivity of the procing faciliy

roenl cwrentJy in use 2 Wha would the productivity ofthe plan becume

meat wen purchased and implemented 3 Wbat would be the amount of additional xpen~

ll)at would make productiviy of the two sy eq 4 What might happeD ifenergy costs increase in

s~ Dr tan M Langella Shippensburg Univershy

il Frito-lay Operations Management in Manufacturing

Milo-Lay the massive Dallas-based ubdiary of PepiCo has 38 p1aots and 48000 employees in North AJnerica Seven of FritO-LaYs 41 brands exceed Sl bHlitm in sates Fritos Lays Cheet~ Ruffles TOSliios DoriIOS and Walkers Potato Otips Operations is the focus

of he f~flOm ~bullbullignig products for new marlltcs to meeting dtarlging consumer preferences to odjusting to ri sing commodity com laquogt subtJe issues involving navors and preservatives-OM is tItIdtr cootaOl cost bullbull ime quality and market pressur bull Here is a look II boW Ihe 10 decisions of OM are applied al hilt food processor

In the food IndUStry product developmen with neVmiddotproduc~~ submit them to focus groups marketiag Ooce the ~roduct specifications have ClIpble of meeting tho specifications and the standards are ~ed At Frito-Lay quality onsjre inspection of the potatoes used in Rum in Frio Quality continues througbout he with visual inspections and with statistical procc bullbull variables ouch as oil moisrure seasoning salt