Operations Management: Processes and Supply Chains 13th global edition by Lee J. Krajewski Solution

their investment in more substantial tooling or by exploring the use of other forms of
automation.
Using Operations to Create Value   CHAPTER 1 

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PROBLEMS
Addressing the Trends and Challenges in Operations Management
1.  Boehring University
a. Value of output:
students credit-hours $200 tuition $100 state support
75 3 $67,500 class
class student credit-hours
  
  
 
 
Value of input: labor + material + overhead
$25
$6500 75 students $30,000
student
$38,375 class
class
 
  
 
 

Multifactor Productivity ratio:
Productivity
Output $67,500
1.76
Input $38,375
  
Compared to Solved problem 1, multifactor productivity has increased from
1.25 to 1.76.
b. Value of output is the same as in part a:  $67,500 class
Labor-hours of input:
20 16 320
hours
week
weeks
class
hours
class
 
Productivity ratio:
Labor Productivity
Output $67,500
$210.94 hour
Input 320 hours
  
The $192 season ticket price is not used in this calculation. It is a “red herring.”
2.  Suds and Duds Laundry
a. Labor productivity
Week
Number of
Workers
Input
(Labor-hours)
Output
(Shirts)
Output/Input
Ratio
1  2  24  68  2.83 shirts/hour
2  2  46  130  2.83 shirts/hour
3  3  62  152  2.45 shirts/hour
4  3  51  125  2.45 shirts/hour
5  2  45  131  2.91 shirts/hour
b. Output per person does not vary much whether it is Sud, Dud, or Jud working.
Productivity declines when all three are present. Perhaps there isn’t enough work to
keep three persons occupied, or perhaps there is not enough work space or
equipment to accommodate three workers.

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3.  White Tiger Electronics compact disc players
Value of Output: $300
Value of Input: Labor + Materials + Overhead
Productivity
Ouput $300
2.000
Input $30 $70 $50
  
 
10% productivity improvement     200 110 2200 . . .
Given productivity  220 . , and the value of output  $300, we solve for the cost of
inputs:
Productivity
Ouput $300
2.20
Input Input
  
Input
$300
$136.36
2.2
  or $136
The cost of inputs must decrease by   $150 $136 $14   .
a. A $14 reduction in material costs is  $14 $70 20.00% 
b. A $14 reduction in labor costs is  $14 $30 46.67% 
c. A $14 reduction in overhead is $14/$50 = 28.00%
4.  Symtecks
The output of a process is valued at $100 per unit. The cost of labor is $50 per hour
including benefits. The accounting department provided the following information
about the process for the past four weeks:
Week 1  Week 2  Week 3  Week 4
Units Produced 1124  1310  1092  981
Total Value  112,400  131,000  109,200  98,100
Labor ($)  12,735  14,842  10,603  9526
Labor (hrs)  254.7  296.8  212.1  190.5
Material ($)  21,041  24,523  20,442  18,364
Overhead ($)  8,992  10,480  8,736  7,848
Multifactor Productivity  2.63  2.63  2.75  2.75
Labor Productivity  4.41 units/hr  4.41units/hr  5.15 units/hr  5.15 units/hr
a. Use the multifactor productivity ratio to see whether recent process
improvements had any effect and, if so, when the effect was noticeable.
Value of output
1124units $100 $112,400  
Value of input: labor + material + overhead
$12,735 + $21,041 + $8,992 = $42,768
Productivity ratio:
Labor Productivity
Output
Input

Using Operations to Create Value   CHAPTER 1 
Copyright © 2022 Pearson Education, Ltd.
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Week 1  Productivity
Output $112,400
2.628
Input $42,768
  
Week 2  Productivity
Output $131,000
2.628
Input $49,845
  
Week 3  Productivity
Output $109,200
2.745
Input $39,781
  
Week 4  Productivity
Output $98,100
2.745
Input $35,738
  
2.745 2.628
100% 4.45%
2.628

 
Improved 4.45% - noticeable in Week 3
b. Has labor productivity changed? Use the labor productivity ratio to support your
answer.
Labor-hours of input: Labor $50/hour
Labor costs
Week 1 = $12,735/$50 = 254.7