Ch 1 HW Concepts
_______ 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 weddingcake, 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.
