Operations Management (Operations and Productivity) Answers Part 4

35) A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm typically cleaned 70 chemical tank cars per month. They utilized 12 gallons of solvent, and two employees worked 20 days per month, 8 hours a day. The company decided to switch to a larger cleaning machine. Last April, they cleaned 60 tank cars in only 15 days. They utilized 15 gallons of solvent, and the two employees worked 8 hours a day. (a) What was their raw material and their labor productivity with the standard equipment? (b) What is their raw material and their labor productivity with the larger machine? (c) What is the change in each productivity measure? Aw n:sre Resource (a) Standard Equipment (b) Larger Machine Solvent 70/12 = 5.83 60/15 = 4 Labor 70/320 = 0.22 60/240 = 0.25 (c) Percent Change (4 — 5.83)/5.83 = −31.39% (0.25 — 0.22)/0.22 = 13.64% 36) The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some small changes in equipment, and conducted appropriate job training, so that production levels have risen to 400 boxes per shift. These changes did not require any change in the amount of capital spending or energy use. What is the firm's new labor productivity? Answer: 800 boxes per day / 16 hours = 50 boxes per hour 37) Mark's Ceramics spent $4000 on a new kiln last year in the belief that it would cut annual energy usage 25% over the old kiln. This kiln is an oven that turns "greenware" into finished pottery. Mark is concerned that the new kiln requires extra labor hours for its operation. Mark wants to check the energy savings of the new oven, and also to look over other measures of their productivity to see if the change really was beneficial. Mark has the following data to work with: Production (finished units) Greenware (pounds) Labor (hrs) Capital ($) Energy (kWh) Last Year 4000 5000 350 15000 4000 This Year 4000 5000 390 20000 2800 Were the modifications beneficial? Answer: The energy modifications generated more than the expected energy savings; however, labor and capital productivity decreased. Resource Last Year 4000 / 350 = Labor 11.43 4000 / 15000 = Capital 0.27 4000 / 4000 = Energy 1.00 This Year Change Pct. Change 4000 / 390 = 10.26 −1.17 −10.24% 4000 / 20000 = . 20 −0.07 −25.93% 4000 / 2800 = 1.43 0.43 43% 38) Martin Manufacturing has implemented several programs to improve its productivity. They have asked you to evaluate the firm's productivity by comparing this year's performance with last year's. The following data are available: Output Labor Hours Utilities Capital Last Year 10,500 units 12,000 $7,600 $83,000 This Year 12,100 units 13,200 $8,250 $88,000 Has Martin Manufacturing improved its productivity during the past year? Answer: Productivity improved in all three categories this year; utilities showed the greatest increase, and labor the least. Resource Last Year 10500 / 12000 = Labor 0.88 10500 / 83000 = Utilities 0.13 10500 / 7600 = Capital 1.38 This Year Change Pct. Change 12100 / 13200 = 0.92 0.04 4.55% 12100 / 88000 = 0.14 0.01 7.69% 12100 / 8250 = 1.47 0.09 6.52% 39) Felicien grows mirlitons (that's Cajun for Chayote squash) in his 100 by 100-foot garden. He then sells the crop at the local farmers' market. Two summers ago, he was able to produce and sell 1200 pounds of mirlitons. Last summer, he tried a new fertilizer that promised a 50% increase in yield. He harvested 1700 pounds. Did the fertilizer live up to its promise? Answer: Since the productivity gain was 41.67%, which is less than 50%, the fertilizer was not as good as advertised. Two Summers Ago Last Summer Change 1200 ÷ 10,000 = .12 1700 ÷ 10,000 = .17 (.17 - .12) ÷ .12 = 1bs/sq. ft lbs/sq. ft 41.67% 40) The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 350 boxes per shift. Labor costs average $15 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3,000 per day and rose to $3,200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day. What is the firm's multifactor productivity before and after the changes? Answer: MFP before: 500 boxes / ($15 × 5 × 16 + $3000 + $400) = 500 / $4600 = 0.109 boxes/ dollar MFP after: 700 boxes / ($15 × 5 × 16 + $3200 + $400) = 700 / 4800 = 0.146 boxes/dollar 41) Gibson Products produces cast bronze valves for use in offshore oil platforms. Currently, Gibson produces 1600 valves per day. The 20 workers at Gibson work from 7 a.m. until 4 p.m., with 30 minutes off for lunch and a 15-minute break during the morning work session and another at the afternoon work session. Gibson is in a competitive industry and needs to increase productivity to stay competitive. They feel that a 20 percent increase is needed. Gibson's management believes that the 20 percent increase will not be possible without a change in working conditions, so they change work hours. The new schedule calls on workers to work from 7:30 a.m. until 4:30 p.m., during which workers can take one hour off at any time of their choosing. Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday. After this change, valve production increased to 1800 units per day. (a) Calculate labor productivity for the initial situation. (b) Calculate labor productivity for the hypothetical 20 percent increase. (c) What is the productivity after the change in work rules? (d) Write a short paragraph analyzing these results. Answer: (a) Workers are active for eight hours per day; labor productivity is 10 valves/hour (b) If productivity rises by 20 percent, to 12 valves/hour; output would be 12 × 8 × 20 = 1920 (c) New productivity is 1800 / (20 × 8) = 11.25 valves/hour (d) Gibson did not gain the desired 20 percent increase in productivity, but they did gain 12.5%, without extra equipment or energy, and without increasing the labor cost. 42) A local university is considering changes to its class structure in an effort to increase professor productivity. The old schedule had each professor teaching 5 classes per week, with each class meeting an hour per day on Monday, Wednesday, and Friday. Each class contained 20 students. The new schedule has each professor teaching only 3 classes, but each class meets daily (Mon.-Fri.) for an hour. New classes contain 50 students. (a) Calculate the labor productivity for the initial situation (students/hour). (b) Calculate the labor productivity for the schedule change (students/hour). (c) Are there any ethical considerations that should be accounted for? (d) Suppose that each teacher also is required to have 2 hours of Office Hours each day he/she taught class. Is the schedule change a productivity increase? Answer: (a) Professors teach 100 students in 15 hours or 6.67 students/hour. (b) Professors teach 150 students in 15 hours or 10 students/hour. (c) Responses should focus on honoring stakeholder commitment and can include students per professor ratio, class sizes, quality of education, etc. (d) Initial productivity is 100 students in 21 hours or 4.76 students/hour. New productivity is 150 students in 25 hours or 6 students/hour, an increase or 1.24 students/hour. 43) A grocery chain is considering the installation of a set of 4 self-checkout lanes. The new selfcheckout lane setup will replace 2 old cashier lanes that were staffed by a cashier and bagger on each lane. One cashier mans all 4 self-checkouts (answering questions, checking for un-scanned items, taking coupons, etc). Checkout on the new lanes takes 2 minutes (customers bag their own orders) while checkout with the old lanes took only 45 seconds. In addition, the electricity costs for both setups are $0.05 per checkout while bagging (material) costs are $0.10 per checkout with the old system and $0.15 for the new system. The new lanes also require $100/shift in capital costs. Assume that the lanes are always in use for 8 hours per day (1 shift) and that a worker makes $10/hour. (a) How many checkouts did the old system provide in a shift? (b) How many checkouts does the new system provide? (c) What is the multifactor productivity for each system? Answer: (a) (2 lanes)(8 hours)(3600 seconds/hour)(1 checkout/45 seconds) = 1280 checkouts (b) (4 lanes)(8 hours)(60 minutes/hour)(1 checkout/2 min) = 960 checkouts (c) Cost for the old system = (4 workers)(8 hours)($10/hour) + ($0.10)(1280) + ($0.05)(1280) = $512. Cost for the new system = (1 worker)(8 hours)($10/hour) + ($0.15)(960) + ($0.05)(960) + $100 = $372. Multifactor productivity for old system = 1280 checkouts / $512 = 2.5 checkouts/$. Multifactor productivity for new system = 960 checkouts / $372 = 2.6 checkouts/$. 44) A swimming pool company has 100,000 labor hours available per summer and with a labor productivity of 5 pools per 4,000 hours. (a) How many pools can the company install this summer? (b) Suppose the multifactor productivity was one pool per $25,000. How much should the company expect to spend this summer constructing the pools? Answer: (a) 100,000 hours × 5 pools/4000 hours = 125 pools (b) 125 pools × $25,000/pool = $3,125,000 45) An industrial plant needs to make 100,000 parts per month to meet demand. Each month contains 20 working days, each of which allows for 3 separate 8 hour shifts. (a) If a worker can produce 10 parts/hour, how many workers are needed on each shift? (b) If each shift has 100 workers, what is the productivity of an individual worker? (c) If material costs are $10/part, capital costs are $100,000 and labor costs are $10/hour, what is the multifactor productivity of the plant from part (a)? Answer: (a) 100,000 parts × (1 hour / 10 parts) × (1 shift / 8 hours) × (1 worker/60 shifts) = 20.83 = 21 workers (b) 100,000 parts / [(60 shifts/worker) × (100 workers) × (8 hours/shift)] = 2.08 parts/hour (c) 100,000 parts / [($10/part) × (100,000 parts) + $100,000 + (21 workers) × (60 shifts/worker) × (8 hours/shift) × ($10/hour)] = .083 parts/$1 46) The local fast-food store experienced the following number of customers on the night shift: Hour Customers 12 AM 35 1 AM 28 2 AM 15 3 AM 5 4 AM 2 5 AM 1 If the store was staffed by three workers, what was the average productivity per worker, in customers/hour? Answer: (35 + 28 + 15 + 5 + 2 + 1) customers/ (3 workers ∗ 6 hours/worker) = 86/18 = 4.78 customers/hour Current Challenges in Operations Management 1) Lean manufacturing means designing green products and packaging that minimize resource use, can be recycled or reused, and are generally environmentally friendly. Answer: FALSE 2) Technology combined with rapid international communication of news, entertainment, and lifestyles is dramatically increasing the life span of products. Answer: FALSE 3) Current challenges in operations management include all of the following EXCEPT: A) lean operations. B) rapid product development. C) mass customization. D) sustainability. E) increased communication cost. Answer: E 4) Which of the following statements about challenges in operations management is FALSE? A) Operations managers are outsourcing and building long-term partnerships with critical players in the supply chain. B) Local or national focus is being replaced by global focus. C) Sustainable production is being replaced by a low-cost focus. D) Rapid product development is partly the result of shorter product cycles. E) The goal of mass customization is to produce customized products, whenever and wherever needed. Answer: C 5) ________ is the ability of the organization to be flexible enough to cater to the individual whims of consumers. Answer: Mass customization 6) ________ means designing green products and packaging that minimize resource use, can be recycled or reused, and are generally environmentally friendly. Answer: Sustainability 7) Why are organizations changing from standardization to mass customization? Answer: In the global marketplace, the cultural and individual differences become obvious. Therefore, as consumers become increasingly aware of innovation and options, substantial pressure is placed on firms to respond in a creative way. 8) Why are organizations becoming more global? Answer: Organizations are becoming more global with the decline in the costs of communication and transportation. Additionally, resources in the form of capital, materials, Ethics, Social Responsibility, and Sustainability 1) Ethical and social dilemmas arise because stakeholders of a business have conflicting perspectives. Answer: TRUE 2) Stakeholders are always stockholders. Answer: FALSE 3) Which of the following is NOT among the ethical and social challenges facing operations managers? A) honoring stakeholder commitments B) training, retaining, and motivating employees C) efficiently developing and producing safe high-quality green products D) increasing executive pay E) providing a safe workplace Answer: D 4) A business's stakeholders, whose conflicting perspectives cause ethical and social dilemmas, include: A) lenders. B) suppliers. C) owners. D) employees. E) all of these. Answer: E 5) What term is given to those individuals with a vested interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members? A) alumni B) investors C) vestors D) stockholders E) stakeholders Answer: E 6) Why are operations managers faced with ethical and social challenges? Answer: Businesses have diverse stakeholders, which include customers, distributors, suppliers, owners, lenders, employees, and the community. These stakeholders hold conflicting perspectives. 7) What are some of the ethical and social challenges faced by operations managers? Answer: Managers are challenged to develop and produce safe, high-quality green products; train, retain, and motivate employees in a safe workplace; and honor stakeholder commitments.