Ch 1 HW Concepts

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​_______ are the fundamental activities that organizations use to do work and achieve their goals. A. Inputs B. Operations C. Processes D. Tasks

Processes

Mack's guitar fabrication shop produces low​ cost, highly durable guitars for beginners.​ Typically, out of the 100 guitars that begin production each​ month, only 78 percent are considered good enough to sell. The other 22 percent are scrapped due to quality problems that are identified after they have completed the production process. Each guitar sells for $260. Because some of the production process is​ automated, each guitar only requires 8 labor hours. Each employee works an average 160 hours per month. Labor is paid at $11​/hour, materials cost is $40​/guitar, and overhead is $4,000.

------------------ EXPLANATION: A.) For​ Mack's shop, the typical monthly revenue​ is: Price×Quantity=​$260×78=​$20,280. For​ Mack's shop, the typical labor hours spent in production of guitars​ is: Guitars produced each month×Labor hours per guitar=100 guitars×8 labor hours per guitar=800 hours. The labor productivity ratio in dollars per hour for​ Mack's guitar fabrication shop​ is: Total monthly​ revenue/Labor hours per month=​$20,280​/800 hours=​$25.35 per hour. B.) For a typical​ month, the total cost that is incurred by Mack producing the guitars​ is: Labor cost+Materials cost+Overhead cost=​($11​/hour×800 ​hours)+​($40​/guitar×100 ​guitars)+​$4,000=​$16,800. The multifactor productivity ratio for​ Mack's guitar fabrication shop is ​(​$20,280​/$16,800​)=1.21. C.) After some​ study, the operations manager Darren Funk recommends 3 options to improve the​ company's multifactor​ productivity: ​ (Option 1​) increase the sales price by 13 ​percent, ​ (Option 2​) improve quality so that only 13 percent are​ defective, or ​ (Option 3​) reduce​ labor, material, and overhead costs by 13 percent. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 1 to improve the multifactor​ productivity, for​ Mack's shop, the typical monthly revenue will be Price×Quantity=​($260×1.13​)×78=​$22,916. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 1 to improve the multifactor​ productivity, the new productivity level would be ​($22,916​/$16,800​)=1.36. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 2 to improve the multifactor​ productivity, for​ Mack's shop, the typical monthly revenue will be Price×Quantity=​$260×​(100−13​)=​$22,620. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 2 to improve the multifactor​ productivity, the new productivity level would be ​($22,620​/$16,800​)=1.35. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 3 to improve the multifactor​ productivity, for​ Mack's shop, the typical total monthly cos

The Big Black Bird Company​ (BBBC) has a large order for special​ plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 40 hours each per​ week, the BBBC production process usually produces 2,500 uniforms per week at a standard cost of ​$120 each. 72 employees work the first shift and 30 the second. The contract price is ​$200 per uniform. Because of the urgent​ need, BBBC is authorized to use​ around-the-clock production, six days per week. When each of the two shifts works 72 hours per​ week, production increases to 3,800 uniforms per week but at a cost of ​$144 each. A.) The multifactor productivity ratio based on the normal two shifts production level is :

--------------------- EXPLANATION: The multifactor productivity ratio based on the normal two shifts production level is ​(2,500×​$200​)/(2,500×​$120​)=1.67. The multifactor productivity ratio based on the two shifts working 72 hours per week is ​(3,800× ​$200​)/(3,800×​$144​)=1.39. The multifactor productivity level decreased for two shifts working 72 hours when compared to the level of the normal two shift. The multifactor productivity ratio based on the normal two shift decreased by % Change =(Current Value − New Value)Current Value×100=16.77​% as compared to two shifts working 72 hours per week. The labor productivity ratio based on the normal two shifts production level is ​(2,500×​$200​)/(40×​(72+30​))=​$122.55 per hour. The labor productivity ratio based on the two shifts working 72 hours per week is ​(3,800×​$200​)/(72×​(72+30​))=​$103.49 per hour. The labor productivity level decreased for two shifts working 72 hours when compared to the level of the normal two shift. The labor productivity ratio based on the normal two shift decreased by % Change =(Current Value − New Value)Current Value×100=15.55​% as compared to two shifts working 72 hours per week. The profit based on the normal two shifts production of 2,500 uniforms is ​(2,500×​$200​)−​(2,500×​$120​)=​$200,000. The weekly profit based on the two shifts working 72 hours per week and producing 3,800 uniforms is ​(3,800×​$200​)−​(3,800×​$144​)=​$212,800. The weekly profits increased as a result of production increasing to 3,800 as compared to the normal production of 2,500 uniforms.

Suds and Duds Laundry washed and pressed the following number of dress shirts per​ week: a. For the given​ information, the labor productivity per hour for each week is ​(enter your responses rounded to two decimal ​places)​: Week 1 > Sud & Dud > Total Hours 26 > Shirts 73

=2.81 ------------------------ labor productivity= output (shirts) / input (labor hours)

Alyssa's Custom Cakes currently sells 5 ​birthday, 2 ​wedding, and 2 specialty cakes each month for ​$55​, ​$155​, and ​$105 ​each, respectively.​ Alyssa's current multifactor productivity ratio is 1.35. a. Assuming each cake costs the same to​ make, what is the average cost to produce a​ cake? b. If the cost of labor is $50 per hour​ (including benefits) and it takes 90 minutes to produce a birthday​ cake, 240 minutes to produce a wedding​cake, and 60 minutes to produce a specialty​ cake, what is​ Alyssa's labor productivity ratio in dollars per hour for each type of​ cake? c. Alyssa should be trying to sell more of the cakes for which labor productivity​ (in dollars per​ hour) is highest. d. Alyssa should stop selling the cake whose price is less than the average cost of producing a cake. ​

A)= $65.43 avg. cost per cake B)= ​$36.67 per hour for bday cake $38.75 per hour for wedding cake $105.00 per hour for specialty cake C) ​Based on the labor productivity ratio in dollars per​ hour, the cakes that Alyssa should be trying to sell more of are specialty cakes. D) Based on the given multifactor productivity ratio of 1.35 and the determined average cost to produce a​ cake, the type of cake that Alyssa should definitely stop selling is birthday cakes. --------------------------- EXPLANATION: A) To find the average cost to produce a​ cake, first find the total monthly revenue by multiplying the number of cakes sold by the price of each cake and finding the sum. ​ (5×​$55​)+​(2×​$155​)+​(2×​$105​)=​$795. ​Then, divide monthly revenue by the given multifactor productivity to find the total​ costs: ​($795​/1.35​)=​$588.89. ​Finally, divide the total costs by the total number of cakes sold per​ month: ​$588.89​/(5+2+2​)=​$65.43. B) Productivity = Output / Input. To get labor productivity in terms of​ $/hr, divide the selling price for the cake by the number of hours necessary to make the cake. ​ Alyssa's labor productivity ratio for birthday cakes is ​ ($55​/1.5 ​hours)=​$36.67 per hour. Alyssa's labor productivity ratio for wedding cakes is ​($155 ​/4 hours)=​$38.75 per hour. Alyssa's labor productivity ratio for specialty cakes is ($105​ /1 hour)=​$105.00 per hour.

Which of the following events from the twentieth century defines the history of operations and supply chain​ management? A. The invention of the assembly line for the Model T car by Henry Ford. B. The Toyota Production System for removing wasteful activities from an organization. C. Alfred​ Sloan's introduction of strategic planning for achieving product proliferation and variety. D. All of the above.

All of the above

A credit​ card-processing firm would be likely to list the following competitive priorities for its external​ customers: A. Concurrent engineering B. Postponement C. Mass customization D. Consistent quality

Consistent quality

Which of the following considerations is not involved in developing a corporate​ strategy? A. Monitoring and adjusting to changes in the business environment B. Responding to pressures for flexibility C. Developing a staffing plan for the upcoming production period D. Identifying and developing the​ firm's core competencies

Developing a staffing plan for the upcoming production period

Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant is considering choosing between two different​ processes, named Alpha and​ Beta, which can be used to make a component part. To make the correct​ decision, the managers would like to compare the labor and multifactor productivity of process Alpha with that of process Beta. The value of process output for Alpha and Beta is $180 per unit of product A and $130 per unit of product​ B, and the corresponding overhead costs for Alpha and Beta are $8,000 and $6,000​, respectively.

EXPLANATION: a. Which​ process, Alpha or​ Beta, is more​ productive? Productivity is the value of outputs​ (services and​ products) produced divided by the values of input resources​ (wages, cost of​ equipment, and so​ on) used: Productivity=Output / Input. Recall that labor productivity is an index of the output per​ person, per hour​ worked, or per dollar invested in labor. At the same​ time, multifactor productivity is an index of the output provided by all the different resources used in​ production: labor,​ materials, and overhead costs. First determine the total values of inputs and outputs. Note that the overhead costs have to be included as one of the inputs. To find the total values of inputs and​ outputs, sum the corresponding values for each manufactured product. Note that the total value of output is to be presented in monetary units​ ($). Use the per unit cost of the output and the total number of units to be produced to determine the total cost of output for each process. For​ example, the total value of output for Process Alpha is found as 40​($180​)+50​($130​)=​$13,700. Based on the found values of inputs and​ outputs, find the labor productivity and multifactor productivity. Note that the labor productivity here is given by the ratio of the value of output to the cost of labor. At the same​ time, multifactor productivity is given by the ratio of the total value of outputs to the total value of input resources. Labor productivity =Output / Labor cost Multifactor productivity = Output / (Labor cost+Materials cost+Overhead costs) Determine the labor and multifactor productivity for each​ process: Estimate the percentage difference in the productivity of the two​ processes: Process Beta has (6.800−5.269 / 5.269) ×100% =29​% higher labor productivity. Process Beta has (1.714−0.878) / 0.878×100%= 95​% higher multifactor productivity. b. What conclusions can you draw from your​ analysis? Note that labor productivity accounts only for​ labor's efficiency, while multifactor productivity shows the total return of money for each dollar invested in input. Process Beta has higher multifactor​ productivity, while Process Beta has high

Which of the following statements about productivity is​ correct? A. The number of items produced. B. The number of workers used. C. The value of the input resources used divided by the values of the outputs produced. D. Multifactor inputs must be expressed in a common unit of measure.

Multifactor inputs must be expressed in a common unit of measure.

Which of the following are characteristics of service provider​ operations? Part 2 A. Low labor requirements B. Perishable outputs C. Tangible output D. Low customer contact

Perishable outputs

SSS is a local restaurant serving the needs of college​ students, faculty, and staff. The manager is considering adding a website so​ carry-out customers can order in advance more easily. Which process would be a core process in this new​ undertaking? A. Budgeting B. Web design C. Scheduling wait staff D. Creating file system for recipes

Web design

An effective way of gaining a global presence when one firm has a core competency that another needs but is unwilling​ (or unable) to duplicate is Part 2 A. a collaborative effort. B. by licensing technology. C. by locating abroad.

a collaborative effort.

At​ Symtecks, the output of a process is valued at ​$110 per unit. The cost of labor is ​$55 per hour including benefits. The accounting department provided the following information about the process for the past four​ weeks: a. The multifactor productivity ratio for week 1 is enter your response here. ​(Enter your response rounded to two decimal​ places.) b. The labor productivity for week 1 is enter your response here units per hour. ​(Enter your response rounded to two decimal​ places.)

a. The multifactor productivity ratio for week 1 = 2.85 b. The labor productivity for week 1 = 4.84 --------------------------- EXPLANATION: Step 1: Total Revenue=Price per unit×Units produced. For​ example, for week​ 1, total revenue=​$110×1,127=​$123,970. Step 2: Total Cost=Labor+Materials+Overhead. For​ example, for week​ 1, total cost=​$12,807+​$21,188+​$9,474=​$43,469. Step 3: Labor Hours=Total cost of labor per week / Cost of labor per hour. For​ example, for week​ 1, labor hours=​($12,807​/$55​)=232.9 hours. Step 4: Multifactor productivity=Total revenue / Total cost. For​ example, for week​ 1, multifactor productivity=​($123,970​/$43,469​)=2.85. Step 5: Labor productivity​ (in units per ​hour)=Units producedLabor hours. For​ example, for week​ 1, labor productivity=​(1,127 ​units/232.9 ​hours)=4.84

The core processes in a value chain must add value for the external​ customers, while support processes Part 2 A. do not add value to the customer. B. are directly involved in service to the external client. C. are also part of the value chain. D. include the​ order-fulfillment process.

are also part of the value chain.

Core competencies reflect the collective learning of the organization. Core competencies include A. an abundance of customers. B. employee benefits. C. a​ well-trained, flexible workforce. D. an abundance of competitors.

a​ well-trained, flexible workforce

The finance function influences operating decisions about A. employee training. B. demand forecasts. C. delivery promises. D. capacity expansion.

capacity expansion

The​ low-cost source for service labor for the world is Part 2 A. China. B. North Korea. C. South Korea. D. India.

india

What do all processes​ have? A. inputs and outputs B. purchased materials and services C. workers and managers D. equipment and facilities

inputs and outputs

Selecting the transportation mode​ (train, ship,​ truck, airplane, or​ pipeline) and scheduling both​ in-bound and outbound shipments is typically accomplished by which supply chain​ process? A. sourcing B. logistics C. warehousing D. ​cross-docking

logistics

A customer service package would exclude which of the​ following? Part 2 A. ​Delivery/installation B. Explicit services C. Supporting facility D. Marketing

marketing

The foundation for managing processes and value chains is A. operations strategy. B. a market orientation. C. globalization. D. project management.

operations strategy.

Which core process includes the activities required to produce and deliver the service or product to the external​ customer? A. new​ service/product development process B. supplier relationship process C. order fulfillment process D. customer relationship process

order fulfillment process

Regardless of how departments and functions are individually​ managed, they are always linked together through A. processes. B. procedures. C. executive oversight. D. information systems.

processes

The time period during which production processes increase volume in order to meet customer demands while coping with quality problems and​ last-minute design changes is called Part 2 A. ​ramp-up. B. ​blast-off. C. ​full-throttle. D. blue moon.

ramp up

Decisions that tend to focus on the entire​ organization, cutting across departmental​ lines, and have​ long-term consequences are called A. tactical. B. departmental. C. strategic. D. operations.

strategic.

In market​ analysis, the needs assessment step identifies A. demographic factors. B. product/service attributes. C. market segments. D. psychological factors.

​product/service attributes.


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