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Utilization and Efficiency Analysis

This document summarizes a problem solving assignment that includes three problems related to operations management concepts. The first problem involves calculating utilization and efficiency for loan processing and furnace repair operations. The second problem involves determining the volume needed for a pottery producer to break even, obtain certain profit levels, and reach revenue targets given fixed and variable costs. The third problem involves calculating additional component needs based on a bill of materials table for an assembly.

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Gloria Lestari Djamen
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25 views2 pages

Utilization and Efficiency Analysis

This document summarizes a problem solving assignment that includes three problems related to operations management concepts. The first problem involves calculating utilization and efficiency for loan processing and furnace repair operations. The second problem involves determining the volume needed for a pottery producer to break even, obtain certain profit levels, and reach revenue targets given fixed and variable costs. The third problem involves calculating additional component needs based on a bill of materials table for an assembly.

Uploaded by

Gloria Lestari Djamen
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Week 2 -- Problem Solving Assignment

Monday, June 23, 2014 10:22 AM

1. [Utilization and the Efficiency] Ch 5 – Page 212 – Problem 1


Determine the utilization and the efficiency for each of these situations:
a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per
day and an effective capacity of 8 loans per day.
b. A furnace repair team that services an average of four furnaces a day if the design capacity is six furnaces a day and the
effective capacity is five furnaces a day.
c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than
those other systems? Explain.

Utilization =

Efficiency =

Utilization =

Efficiency =

2. [Capacity Planning] Ch 5 – Page 212 – Problem 3


A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary
location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each
item is sold to retailers at a price that averages 90 cents.
a. What volume per month is required in order to break even?
b. What profit would be realized on a monthly volume of 61,000 units? 87,000 units?
c. What volume is needed to obtain a profit of $16,000 per month?
d. What volume is needed to provide a revenue of $23,000 per month?

What are given in the problem description?

Profit = Total Revenue - Total Cost

What do we mean "break even"?

MIS-373 Page 1
What do we mean "break even"?

3. [Bill of Materials] Ch 12 – Page 535 – Problem 2


The following table lists the components needed to assemble an end item, lead times, and quantities on hand.

a. If 20 units of the end item are to be assembled, how many additional units of E are needed?

--

MIS-373 Page 2

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