1) Complete the following chapter 1 problems:

Problem 1.1:

Chuck Sox makes wooden boxes in which to ship motorcycles. Chuck and his three employees
invest a total of 40 hours per day making the 120 boxes.

a. What is their productivity?

b. Chuck and his employees have discussed redesigning the process to improve efficiency. If
they can increase the rate to 125 per day, what will be their new productivity?
c. What will be their unit increase in productivity per hour?
d. What will be their percentage change in productivity?

Solution

Part A:

The formula of productivity is given as ‘output divided by input’. Thus, adding the output
and input values in the formula yields the following result:

Given data:

Output- 120 boxes

Input- 40 hours/day

Therefore, 120 boxes/ 40 hours per day

= 120/40 =3

Therefore, 3 units per labor-hour is the productivity.

Part B:

In this case, using the same formula with output being 125 boxes per day, the new
productivity can be obtained

Output- 125 boxes

Input- 40 hours
= 125/40= 3.125

Therefore, 3.125 units per labor-hour is the new productivity.

Part C:

The unit increase in productivity per hour can be measured by subtracting the former
productivity rate from the new one. This gives the following values:

= (3.125-3.00)
= 0.125 boxes/ hour increase

Part D:

The percentage change in productivity can be obtained by performing basic algebra, by

taking the variance between new and former productivity value, the figure is then divided by the
former (original) productivity rate.

0.125 is the variance between the new and old productivity rate

3 is the original rate

= 0.125/3

= 0.0416 (or) 4.16% is the increase in productivity.

Problem 1.2:

Carbondale Casting produces cast bronze valves on a 10-person assembly line. On a recent
day, 160 valves were produced during an 8-hour shift.

a) Calculate the labor productivity of the line.

b) John Goodale, the manager at Carbondale, changed the layout and was able to increase
production to 180 units per 8-hour shift. What is the new labor productivity per labor-hour?
c) What is the percentage of productivity increase?

Solution:

A) The formula for calculating the labor productivity is, number of units divided by number of
hours.

Given data: Number of units- 160 valves

Number of hours- 8 hours*10= 80 hours

Productivity= Output/input (Labor hour)

= 160 Valves/80 labor hour

= 2Valves/ labor hour

B) Since the layout was changed by John Goodale, the manager, and the production was increased
to 180 units per 8-hour shift, therefore the new labor productivity per labor-hour can be obtained
by:

Labor productivity= New output/labor hour

= 180 Valves/80 labor hour

= 2.25Valves/ labor hour

Therefore, the new labor productivity is 2.25Valves/ labor hour.

C) The percentage of productivity increase is calculated as follows:

𝑁𝑒𝑤 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦−𝑂𝑙𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦

* 100%
𝑂𝑙𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦

New productivity: 2.25 Valves/labor hour

Old productivity: 2 Valves/ labor hour

 2.25−2
Productivity Increase: *100% = 12.5%
2

Problem 1.5:

George Kyparisis makes bowling balls in his Miami plant. With recent increases in his
costs, he has a newfound interest in efficiency. George is interested in determining the productivity
of his organization. He would like to know if his organization is maintaining the manufacturing
average of a 3% increase in productivity. He has the following data representing a month from last
year and an equivalent month this year:

LAST YEAR NOW

Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 3,000 2,850

Show the productivity percentage change for each category and then determine the
improvement for labor-hours, the typical standard for comparison.

Answer:

Data Last Now Productivity (Last Productivity Productivity change

year year) (Now)
Units 1000 1000 𝑁𝑒𝑤 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦−𝑂𝑙𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦
𝑂𝑙𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦
produc
* 100%
ed
(Outpu
t)
 Labor 300 275 1000U/300Lh= 1000U./275L 9.31%
(Hour) 3.33Up/L h= 3.64U/Lh
Resin 50 45 1000U/50P= 20U/P 1000U/45P= 11.1%
(Pound 22.22U/P
)
Capital 10,00 11,00 1000U/10000R=0.1U 1000U/11000 10%
(R) 0 0 /R R= 0.09U/R
Energy 3000 2850 1000U/3000Btu=0.3 1000U/2850B 16.67%
(BTU) U/Btu tu= 0.35U/Btu

Therefore, the Labor Productivity Change= 9.31%

Resin Productivity Change= 11.1%

Capital Productivity Change= 10%

Energy Productivity Change= 16.67%

Problem 1.8:

Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes
1,000 tires per day with the following resources:

Labor: 400 hours per day @ $12.50 per hour

Raw Material: 20,000 pounds per day@ 1.00 per pound

Energy: $5,000 per day

Capital: $10,000 per day

a) What is the labor productivity per labor-hour for these tires Lakefront Manufacturing?
b) What is the multifactor productivity for these tires at Lakefront Manufacturing?
c) What is the percent change in multifactor productivity if Fok can reduce the energy bill by
$1,000 per day without cutting production or changing any other inputs?
Part A:

Answer:

Given data:

Measure Cost per Input Unit

Units Produced 1,000 1,000
Labor 400 $12.50
Raw Material 20,000 $1.00
Energy 5,000 1
Capital 10,000 1

The formula of Labor productivity can be used to solve the problem, thus adding all the values in
the productivity formula, we get

Labor productivity per labor hour= Total number of tires manufactured each day/ Total
number of labor hours spent

=1000 tires/400 labor hour

= 2.5 tires/ labor hour

𝑂𝑢𝑡𝑝𝑢𝑡
b) The formula for Multifactor productivity is 𝐿𝑎𝑏𝑜𝑟+𝑅𝑎𝑤 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙+𝐸𝑛𝑒𝑟𝑔𝑦+𝐶𝑎𝑝𝑖𝑡𝑎𝑙

Therefore, adding all the given values into the equation, we get:

1,000 𝑡𝑖𝑟𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦

= 0.025
(400∗12.50)+(20,000∗1.00)+5,000+10,000

Therefore, the Multi factor productivity for these tires =0.025 tires/dollar
c) The percent change in multi factor productivity if Fok can reduce the energy bill by $1,000 per
day without cutting production or changing any other inputs.

2) Complete discussion questions, 1, 8, 13

Question 1:

Why one should study operations management?

Operations Management holds a high regard in performing businesses because it manages

the production of quality goods and services and, it makes sure that all the business activities
pertaining to the firms are carried out in a most effective manner and on scheduled timeslot.

Also, Operations Management is a fairly new field of study, but it can be used in various
places more specifically in manufacturing concerns. One must consider studying this subject
considering this filed has a lot of scope. It has a scope in all types of organizations as it works upon
the concept of design engineering, quality management, inventory management and others.
Furthermore, efficient utilization of resources by the employers is possible with operations
management. (Broedner, P., S. Kinkel, and G. Lay, 2009)

Question 8:
Name four areas that are significant for improving labor productivity.

Labor productivity can be increased by working upon these significant four areas: (Sahay,
B. S, 2005)

1. Basic literacy/knowledge of the workforce.

2. Working on the skills of teamwork and constant monitoring.

3. Diet of labor force has a huge impact upon their productivity.

 4. Taking care of social expenses of labor force (availability of water, transportation cost,
maintaining hygiene etc.).

Question 13:

Many believe that productivity is the essence of operations management. Suggest reasons to
support this claim.

Productivity in general, can be described as the ratio of complete output to one unit of complete
input; high productivity represents better capital gains. The following points backup this claim:
(Beckman, S. L., and D. B. Rosenfield, 2008)

 The performance of production can be assessed through productivity, this signifies that
higher profits for businesses and more income for individuals can be obtained through high
productivity.
 The responsibility to maximize productivity with the help of process-oriented observations
and advances is assigned to control managers in the organizations.
 Production process, market value, monetary process, income distribution and real process
are the factors that are responsible for affecting the productivity of work.
 Productivity growth is crucial for any business as offering more goods and services to users
translates increased profits.

3) Complete case study, “Uber Technologies, Inc.”. Answer the discussion questions.

Question 1:

The market has decided that Uber and its immediate competitors are adding efficiency to
our society. How is Uber providing that added efficiency?

Answer:

Supposedly efficiency is added to the society by Uber and firms of like nature; Uber is
making transportation facility easy for the riders by ensuring that vehicles and drivers are available
during all times of the day. Efficiency is provided by Uber as its app works by detecting the cabs
nearby the rider, and offering ease of transportation to them at reasonable and automatic prices on
the road. While hop in into a cab or taxi on the road the passengers were expected to wait for them
and to hope that the arriving cab is not engaged with passengers, this particular problem of waiting
and hoping for an empty ride has been eliminated by the arrival of Uber and its immediate
competitors in the market. Also, Uber has an excellent streamlined service as it gives the liberty
of choosing the driver for their ride. The passengers can check the divers’ profiles and can select
accordingly. The option to rate the driver from 5 to 0 is also available, also the app deducts the
ride’s amount from the passengers’ account automatically, thus eliminating the need to pay by
cash or/and card. (M. E. Porter, 1985)

Question 2:
Do you think the Uber model will work in the trucking industry?

I cannot say with certainty whether or not the Uber model will work feasibly in the trucking
industry because it is more complex. In trucking industry scenario, the loads are allotted to the
truck drivers by the dispatcher and then the trucks are loaded by them and is send to the
destinations. I believe it is quite possible to have an app in place that would inform the drivers of
the available loads, and they can either select or reject based upon their choice. The app in the
trucking industry should be able to inform to the truck drivers whenever load is available, assigns
them the work, keep a log of the assigned work of every truck and driver separately, address issues
at the earliest, if arrived, and mark as complete whenever loads are transported to the destination,
and then make payment to the drivers, without any hassle. Much of the paperwork would be
eliminated with the exercise of this model and also make things prompt and transparent not only
for the drivers but also for dispatch, terminal administrator, and the firm that is sending and
receiving loads.

Question 3:
In what other areas/industries might the Uber model be used?
In almost all types of areas and industries the Uber model works best. An app would be
ideal option for the Lawyers as there are many available lawyers, this way the app would inform
the people about the potential lawyer and be able to negotiate rate and more. Also, this model
works best for babysitter/caregivers too, this will be a wonderful app for the working parents,
where they would be knowing available babysitters in their areas and also, they can check their
reviews on their profiles. House servants, personal trainers, handymen, plumbers, dog walkers,
cooks are some of the fields wherein this model might work brilliantly.
Who knows in the future, people will get to see this model just about everywhere.

4) Complete the following chapter problems:

Problem 2.8
Claudia Pragram Technologies, Inc., has narrowed its choice of outsourcing provider to
two firms located in different countries. Pragram wants to decide which one of the two countries
is the better choice, based on risk-avoidance criteria. She has polled her executives and established
four criteria. The resulting ratings for the two countries are presented in the table below, where 1
is a lower risk and 3 is a higher risk. Assume that the executives have determined four criteria
weightings: Price, with a weight of 0.1; Nearness, with 0.6; Technology, with 0.2; and History,
with 0.1.
SELECTION CRITERION ENGLAND CANADA
Price of service from 2 3
outsourcer
Nearness of facilities to client 3 1
Level of technology 1 3
History of successful 1 2
outsourcing

a) Using the factor-rating method, which country would you select?

Answer:

FACTOR WEIGHT ENGLAND CANADA

(CRITERION)
 1. Price of service 0.1 2*0.1=0.2 3*0.1=0.3
from outsourcer
2. Nearness of 0.6 3*0.6=1.8 1*0.6=0.6
facilities to client
3. Level of 0.2 1*0.2=0.2 3*0.2=0.6
technology
4. History of 0.1 1*0.1=0.1 2*0.1=0.2
successful
outsourcing
Total Weighted 1 2.3 1.7
Score

Therefore, based upon factor-rating method (McLaughlin, Patrick, 2014), England is selected
for outsourcing since it has the highest value compared to Canada.

a) Double each of the weights used in part (a) (to 0.2, 1.2, 0.4, and 0.2 respectively). What
effect does this have on your answer. Why?

Answer: Although the conclusion changes, however the weighted averages remain same.
Since, the weighted averages remain same, there is no change in conclusion. (McLaughlin, Patrick,
2014)

Problem 2.9

Ranga Ramasesh is the operations manager for a firm that is trying to decide which one of
four countries it should research for possible outsourcing providers. The first step is to select a
country based on cultural risk factors, which are critical to eventual business success with the
provider. Ranga has reviewed outsourcing provider directories and found that the four countries
in the table that follows have an ample number of providers from which they can choose. To aid
in the country selection step, he has enlisted the aid of a cultural expert, John Wang, who has
provided ratings of the various criteria in the table. The resulting ratings are on a 1 to 10 scale,
where 1 is a low risk and 10 is a high risk.
 John has also determined six criteria weightings: Trust, with a weight of 0.4, Quality, with
0.2: Religious, with 0.1; Individualism, with 0.1; Time, with 0.1; and Uncertainty, with 0.1. Using
the factor-rating method, which country should Ranga select?

CULTURE MEXICO PANAMA COSTA RICA PERU

SELECTION
CRITERION
Trust 1 2 2 1
Society value of 7 10 9 10
quality work
Religious 3 3 3 5
attitudes
Individualism 5 2 4 8
attitudes
Time orientation 4 6 7 3
attitudes
Uncertainty 3 2 4 2
avoidance
attitudes

Answer:

FACTOR(CRITERION) WEIGHT MEXICO PANAMA COSTA PERU

RICA
Trust 0.4 1*0.4=0.4 2*0.4=0.8 2*0.4=0.8 1*0.4=0.4
Society value of quality 0.2 7*0.2=1.4 10*0.2=2 9*0.2=1.8 10*0.2=2
work
Religious attitudes 0.1 3*0.1=0.3 3*0.1=0.3 3*0.1=0.3 5*0.1=0.5
Individualism attitudes 0.1 5*0.1=0.5 2*0.1=0.2 4*0.1=0.4 8*0.1=0.8
Time orientation attitudes 0.1 4*0.1=0.4 6*0.1=0.6 7*0.1=0.7 3*0.1=0.3
 Uncertainty avoidance 0.1 3*0.1=0.3 2*0.1=0.2 4*0.1=0.4 2*0.1=0.2
attitudes
Total Weighted Score 1 3.3 4.1 4.4 4.2

Therefore, based upon factor-rating method, Ranga should select Costa Rica since it carries
the maximum Total Weighted Score. (McLaughlin, Patrick, 2014)

5) Complete case study, “Rapid-Lube”. Answer the discussion questions.

Question 1:

What constitutes the mission of Rapid-Lube?

The mission of rapid-lube is to mainly offer individual owned automobiles economical

preventative maintenance and interior auto cleaning as against the businesses in the United States.

Question 2:

How does the Rapid-lube operations strategy provide competitive advantage?

Rapid-lube’s strategy to the Operations Management’s addressed 10 primary issues involves

the following:

 Service Design: As the customers are offered an excellent value by the Rapid-Lube by
means of offering services to multiple vehicles at the same time. The services consist of
prompt oil change, interior cleaning as well as lubrication services that builds a good image
of the Rapid-Lube amongst its customers.

 Quality Strategy: Rapid-Lube’s quality strategy surpasses as every employee of rapid-lube

is highly skilled and they perform their work accurately and productively and are well
dressed at their workplace.
 Process Strategy: The processes of Rapid-Lube are continuous and effective in its services
since its multiple workers work at the same time which goes on to show that all the workers
pursue and aim at its target efficiently.

 Location Strategy: The clients can smoothly gain access to this location as it is located
nearby their places.

 Layout Strategy: 3 vehicles can be obtained simultaneously by the Rapid-Lube and

concurrently every operation can be performed; by doing this, they are able to maintain
their present services.

 Supply Chain Strategy: The raw material of excellent quality can be purchased from sincere
partners and also excellent bonding is developed with them. Consider an instance,
Automotive Oil Change Association and Automotive Vehicle Industry are some of the
firms it is in alliance with and due to its good quality work, all the customers are content
with it.

 Human Resources Strategy: Under the surveillance of skilled instructors, some workers are
employed by Rapid-lube and in order to better their abilities, they are provided training in
Rapid-Lube academy so as to help them in performing their allotted duties
straightforwardly.

 Inventory: The Rapid-Lube maintains low inventory; by doing so, high revenues can be
expected which shall not induce holding cost and its inventory quality is also changed and
at the time of uncertain situations, its parts and devices can be replaced.

 Scheduling: In a minimum time period, services are provided by Rapid-Lube with the help
of skilled and knowledgeable human resource as that helps in maintaining good relations
with the customers and the customer satisfaction can also be obtained.
  Maintenance: It manages to offer uninterrupted and accurate solutions for maintenance
with fewer equipment and skilled workforce. (M. E. Porter, 1985)

Question 3:

Is it likely that Rapid-Lube has increased productivity over its more traditional competitors?
Why? How would we measure productivity in this industry?

One of the primary factors that contribute to the success of a market is the proficiency and
specialization of product and services and these factors should have a positive impact on Rapid-
Lube.

It is possible to obtain measurable quantity of work efficiency, provided all the tasks are
organized with a time frame, however it is not simple to calculate the work efficiency in general.
That is, work performed by an individual in a certain time frame for instance, task per day is
determinable, thus this manner executed tasks can be measured, and the performance of
organization can be measured in the same way.

6) Complete discussion questions 10, 15, 17.

Question 10:

There are three primary ways to achieve competitive advantage provide an example, not
included in the text, of each. Support your choice.

Business and organizations compete through:

 Realizing customers’ needs and requirements is one of the crucial inputs in the decision-
making process of any organization in the market, and fundamental to competitiveness.
Excellent match among those needs and requirements and the goods and services of the
organization is the formula for success in the market.
  Cost is mainly a fundamental factor influencing customer buying decisions. It becomes
important on the part of organizations to thoroughly understand the trade-off decision
customers make between price and different elements of a product/service such as quality.
 Publicity and promotions can work as a great channel for the organization to inform the
potential consumers of their products and/or servicers, their features, and grab buyers.

Question 15:

Explain citing appropriate examples how flexibility saves time, and stimulates response.

Flexibility:
In the market, organizations might compete against each other on their capability to offer
flexibility of the product and/or volume. Strategic advantage to customers is provided by those
firms that have the potential to easily accept engineering changes (modifications in the product).
The same holds true for services also. An instance in this regard is a leading fast food joint
announced “hold the veggies, hold the pickles, customized orders are most welcome,” which
translates that personalized version of the items are most welcome and that it does not curb the
delivery process. Furthermore, some firms are able to handle huge variations in quantity permitting
users with uncertain demand the comfort of not holding enormous inventories in outlook of change
in demand.

Question 17:

What are some of the possible consequences of poor outsourcing?

Performing outsourcing is not good all times; it does sometime can create unwanted negative
consequences for the organizations. Shown are some of the effects of poor outsourcing for the
organization. (Bravard, J., and R. Morgan, 2006)

 Company’s loyalty will be at stake.

 The opportunities for domestic work force are lessened due to Outsourcing.
 Insourced countries are impacted on a large scale due to Outsourcing.
  Not only the barriers to Entry are lowered through Outsourcing but competition is also
increased because of it.
 Losing of focus on objectives.

References

Broedner, P., S. Kinkel, and G. Lay. “Productivity Effects of Outsourcing.” International Journal
of Operations and Production Management 29, no. 2(2009): 165.

Sahay, B. S. “Multi-factor Productivity Measurement Model for Service Organization.”

International Journal of Productivity and Performance Management 54, no. 1–2 (2005): 45–61.

Beckman, S. L., and D. B. Rosenfield. Operations Strategy: Competing in the 21st Century. New
York: McGraw-Hill, 2008.

Bravard, J., and R. Morgan. Smarter Outsourcing. Upper Saddle River, NJ: Pearson, 2006.

Sprague, Linda G. “Evolution of the Field of Operations Management.” Journal of Operations

Management 25, no. 2 (March 2007): 257–276.

Gupta, M. and Boyd, L. (2008), "Theory of constraints: a theory for operations management",
International Journal of Operations & Production Management, Vol. 28 No. 10, pp. 991-1012.

Walley, P. (1999), "Principles of Operations Management, 2nd edition", International Journal of

Operations & Production Management, Vol. 19 No. 4, pp. 95-96.
https://doi.org/10.1108/ijopm.1999.19.4.95.1

McLaughlin, Patrick. “Measuring Productivity.” Management Services 58, no. 4 (Winter 2014):
69–75.

M. E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance. New York:
The Free Press, 1985.