Operations Management

Module 1: Numerical Question (Productivity)

Q1. 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?

Q2. 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?

Q3. This year, Druehl, Inc., will produce 57,600 hot water heaters at its plant in
Delaware, in order to meet expected global demand. To accomplish this, each laborer
at the plant will work 160 hours per month. If the labor productivity at the plant is
0.15 hot water heaters per labor-hour, how many laborers are employed at the plant?

Q4. Lori Cook produces “Final Exam Care Packages” for resale by her sorority. She is
currently working a total of 5 hours per day to produce 100 care packages.

a) What is Lori’s productivity?

b) Lori thinks that by redesigning the package, she can increase her total productivity
to 133 care packages per day. What will be her new productivity?
c) What will be the percentage increase in productivity if Lori makes the change?

Q5. 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 3% increase in productivity
per year? 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

Dr. Navneet Bhatt

 Operations Management

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

Q6. George Kyparisis (using data from Problem 5) determines his costs to be as
follows:

◆ Labor: $10 per hour

◆ Resin: $5 per pound
◆ Capital expense: 1% per month of investment
◆ Energy: $0.50 per BTU

Show the percent change in productivity for one month last year versus one month
this year, on a multifactor basis with dollars as the common denominator.

Q7. Hokey Min’s Kleen Karpet cleaned 65 rugs in October, consuming the following
resources:

Labor: 520 hours at $13 per hour

Solvent: 100 gallons at $5 per gallon
Machine rental: 20 days at $50 per day

a) What is the labor productivity per dollar?

b) What is the multifactor productivity?

Q8. 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 per pound
Energy $5,000 per day
Capital cost $10,000 per day

a) What is the labor productivity per labor-hour for these tires at 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?

Q9. Brown’s, a local bakery, is worried about increased costs—particularly energy.

Last year’s records can provide a fairly good estimate of the parameters for this year.
Wende Brown, the owner, does not believe things have changed much, but she did
invest an additional $3,000 for modifications to the bakery’s ovens to make them more
energy efficient. The modifications were supposed to make the ovens at least 15%
more efficient. Brown has asked you to check the energy savings of the new ovens and

Dr. Navneet Bhatt

 Operations Management
also to look over other measures of the bakery’s productivity to see if the modifications
were beneficial. You have the following data to work with:

Last Year Now

Production (dozen) 1,500 1,500
Labor (hours) 350 325
Capital investment ($) 15,000 18,000
Energy (BTU) 3,000 2,750

Q10. Munson Performance Auto, Inc., modifies 375 autos per year. The manager,
Adam Munson, is interested in obtaining a measure of overall performance. He has
asked you to provide him with a multifactor measure of last year’s performance as a
benchmark for future comparison. You have assembled the following data. Resource
inputs were labor, 10,000 hours; 500 suspension and engine modification kits; and
energy, 100,000 kilowatt-hours. Average labor cost last year was $20 per hour, kits cost
$1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr.
Munson?

Q11. Lake Charles Seafood makes 500 wooden packing boxes for fresh seafood per
day, working in two 10-hour shifts. Due to increased demand, plant managers have
decided to operate three 8-hour shifts instead. The plant is now able to produce 650
boxes per day.

a) Calculate the company’s productivity before the change in work rules and after the
change.
b) What is the percentage increase in productivity?
c) If production is increased to 700 boxes per day, what is the new productivity?

Q12. Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent
product and excellent location, demand has increased by 25% in the last year. On far
too many occasions, customers have not been able to purchase the bread of their
choice. Because of the size of the store, no new ovens can be added. At a staff meeting,
one employee suggested ways to load the ovens differently so that more loaves of
bread can be baked at one time. This new process will require that the ovens be loaded
by hand, requiring additional manpower. This is the only thing to be changed. If the
bakery makes 1,500 loaves per month with a labor productivity of 2.344 loaves per
labor-hour, how many workers will Lackey need to add? (Hint: Wach worker works
160 hours per month.)

Q13. Refer to Problem 12. The pay will be $8 per hour for employees. Charles Lackey
can also improve the yield by purchasing a new blender. The new blender will mean
an increase in his investment. This added investment has a cost of $100 per month, but
he will achieve the same output (an increase to 1,875) as the change in labor-hours.
Which is the better decision?

Dr. Navneet Bhatt

 Operations Management
a) Show the productivity change, in loaves per dollar, with an increase in labor cost
(from 640 to 800 hours).
b) Show the new productivity, in loaves per dollar, with only an increase in
investment ($100 per month more).
c) Show the percent productivity change for labor and investment.

Q14. In December, General Motors produced 6,600 customized vans at its plant in
Detroit. The labor productivity at this plant is known to have been 0.10 vans per labor-
hour during that month. 300 laborers were employed at the plant that month.

a) How many hours did the average laborer work that month?
b) If productivity can be increased to 0.11 vans per laborhour, how many hours would
the average laborer work that month?

Q15. Susan Williams runs a small Flagstaff job shop where garments are made. The
job shop employs eight workers. Each worker is paid $10 per hour. During the first
week of March, each worker worked 45 hours. Together, they produced a batch of 132
garments. Of these garments, 52 were “seconds” (meaning that they were flawed). The
seconds were sold for $90 each at a factory outlet store. The remaining 80 garments
were sold to retail outlets at a price of $198 per garment. What was the labor
productivity, in dollars per labor-hour, at this job shop during the first week of March?

Q16. As part of a study for the Department of Labor Statistics, you are assigned the
task of evaluating the improvement in productivity of small businesses. Data for one
of the small businesses you are to evaluate are shown at right. The data are the
monthly average of last year and the monthly average this year. Determine the
multifactor productivity with dollars as the common denominator for:

a) Last year.
b) This year.
c) Then determine the percent change in productivity for the monthly average last
year versus the monthly average this year on a multifactor basis.

◆ Labor: $8 per hour

◆ Capital: 0.83% per month of investment
◆ Energy: $0.60 per BTU

Last Year Now

Production (dozen) 1,500 1,500
Labor (hours) 350 325
Capital investment ($) 15,000 18,000
Energy (BTU) 3,000 2,700

Dr. Navneet Bhatt