Math Related to Supply Chain Management

MST-418
Course Title: Production and Operation Management

Submitted to
Md. Tariqul Islam
Assistant Professor
Department of Management Studies
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Submitted by
Group: A
Level-4; Semester-1
Bachelor of Business Administration and Management
Faculty of Business Administration & Management

Date of Submission: 20th July, 2020

Faculty of Business Administration & Management

Patuakhali Science and Technology University
Dumki, Patuakhali-8602

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 Group Members Details

Exam Roll Reg. No. Name

1603001 06569 MD. Ridwan-Ul-Islam

1603003 06571 S M Shadman Soumik
1603004 06572 Shaikh Tanvir Hasnath
1603006 06574 Sujon Meer
1603007 06575 Sajal Mridha
1603008 06576 Taohid Khan

1603011 06579 MST. Fariha

1603012 06580 Md. Alauddin
1603013 06581 Abrab Ahmed
1603014 06582 I.K. Shakkhor
1603015 06583 Naima Tanjim Nipa
1603016 06584 MD. Rezwyanul Babul Fahim
1603017 06585 Kamruzzaman Turan
1603018 06586 Taimiah bin Harun
1603019 06587 Mustafizur Rahman
1603020 06588 Suman Biswas

Problem 1-1.

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Tried and True Clothing has opened four new stores in college towns across the state. Data on
monthly sales volume and labor hours are given below. Which store location has the highest
labor productivity?
Store Annandale Blacksburg Charlottesville Danville
Sales Volume $40,000 $12,000 $60,000 $25,000
Labour hours 250 60 500 200

Solution:
We know,
Output
Labour Productivity =
Labour Hour
Now,
Output
Annardale=
Labour Hour
40000
= =160 units/hour
250
Output
Blacksburg=
Labour Hour
12000
= =200units /hour
60
Output
Charlottesville=
Labour Hour
60000
= =120 units/hour
500
Output
Danville=
Labour Hour
2500
= =125units /hour
200
After measuring the labor productivity, we got the highest labour productivity in store location in
Blacksburg.

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Problem 1-2.
Tried and True’s accountant (from problem, 1-1) suggests that monthly rate and hourly wage rate
also be factored into the productivity calculations. Annandale pays the highest average wage at
$6.75 an hour. Blacksburg pays $6.50 an hour, Charlottesville $6 and Danville $5.50. The cost to
rent store space is 1800 a month in Annandale, $2000 a month in Blacksburg, $1200 a month in
Charlottesville, and $800 a month in Danville.

a) Which store is the most productive?

b) Tried and True is not sure it can keep all four stress open. Based on multifactor productivity,
which store would you close? What other factors should be considered?

Solution:

For Annandale,

Sales volume= $40,000

Rent= $1800

Labor Cost = Labor hours × Per hour Rate

= 250× $6.75

= $ 1687.5

Total Cost = Rent + Labor Cost

= $ 1800+ $ 1687.5

= $ 3487.5

MEP = (Total output/ Total input)

= $ 40,000/ $ 3487.5 = 11.47 units per $

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For Blacksburg,

Sales volume= $ 12,000

Rent= $ 2000

Labor Cost = Labor hours × Per hour Rate

=60× $ 6.5

= $ 390

Total Cost = Rent + Labor Cost

= $ 2000 + $ 390 = $ 2390

MEP = (Sales volume/ Total input)

= ($ 12000/ $ 2390) = 5.02 units per $

For Charlottesville,

Sales volume= $60,000

Rent= $1200

Labor Cost = Labor hours × Per hour Rate

= 500× $6.00

= $ 3000

Total Cost = Rent + Labor Cost

= $ 1200+ $ 3000

= $ 4200

MEP = (Sales volume/ Total input)

= ($60,000/ $4200) = 14.29 units per $

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For Danville,

Sales volume= $25,000

Rent= $800

Labor Cost = Labor hours × Per hour Rate

= 200× $ 5.50

= $1100

Total Cost = Rent + Labor Cost

= $ 800 + $ 1100

= $ 1900

MEP = (Sales volume/ Total input)

= ($25,000/ $ 1900) = 13.15 units per $

a) Most productive store is “Charlottesville”.

b) Thus, least productive store is “Blacksburg”.

So, I would close this store.

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Problem 1-3.

At last year’s bass tournament Jim caught 12 bass in a four hour period. This year he caught 15
in a six hour period. In which year was he most productive? If the average size of the bass last
year was 20 lb and average size this year was 25 lb. would your decision change?

Solution:

Last year single factor productivity = output÷lobors hour

= 12 ÷4

= 3 bass per hour

This year single factor productivity = output÷lobors hour

=15÷6

=2.5 bass per hour

In last year Jim was not productive

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Problem 1-4.

It is time for the annual performance review of Go-Com’s account executives. Account values
and hours spend each week acquiring and servicing accounts are shown below. Each agent works
approximately 45 weeks out of the year, but the time spent on accounts each week differs
considerably. How would you rate the performance of each individual? Which agent is most
productive? Which agents show the most potential?

Agents Albert Bates Cressey Duong

New accounts $100,000 $40,000 $80,000 $200,000
Existing accounts $40,000 $40,000 $150,000 $100,000
Labor hours 40 20 60 80

Solution:

For Albert

Labor productivity of new accounts = (output/labor hours) =100,000/40=$2500 per hour

Labor productivity of existing accounts=40000/40=$ 1000 per hour

And, Average productivity= (2500+1000)/2= $1750 per hour

For Bates

Labor productivity of new accounts = (output/labor hours) =40000/20=$ 2000 per hour

Labor productivity of existing accounts=40000/20=$ 2000 per hour

And, Average productivity= (2000+2000)/2= $2000 per hour

For Cressey

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Labor productivity of new accounts = (output/labor hours) =80000/60=$ 1333.33 per hour

Labor productivity of existing accounts=150000/60=$2500 per hour

And, Average productivity= (1333.33+2500)/2= $196.66 per hour

For Duong

Labor productivity of new accounts = (output/labor hours) =200000/80=$2500 per hour

Labor productivity of existing accounts=100000/80=$ 1250 per hour

And, Average productivity= (2500+1250)/2= $1875 per hour

From above calculation we can say that:

Bates is more productive.

Albert show the most potential.

Problem 1-5.

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 The Bureau of Labor Statistics collects input and output data from various countries
for comparison purposes. Labor hours are the standard measure of input. Calculate the output per
hour from the following data. Which country is most productive?

Labor Hours Units of Output

United States 89.5 136
Germany 83.6 100
Japan 72.7 102

Solution:
We know,
Output
Single Factor Productivity/ Labor Productivity=
Input

Now;
Output
United States, Labor Productivity=
Labor hours
136
=
89.5
=1.52.

output
Germany, Labor Productivity=
Labor Hours
100
=
83.6
=1.20.

output
Japan, Labor Productivity=
Labor Hours
102
=
72.7
=1.40.
So, most productive Country is United States

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Problem 1-6.
Omar industries maintains production facilities in several locations around the globe. Around
monthly cost data and output levels are as follows.
a. Calculate the labour productivity of each facilities?
b. Calculate the multifactor productivity of each facilities?
c. If Omar needed to close one of the plants, which would you choose?

Units Cincinnati Frankfurt Guadalajara Beijing

Finished goods 10000 12000 5000 8000

Work in 1000 2200 3000 6000
process

Costs Cincinnati Frankfurt Guadalajara Beijing

Labour costs $3500 $4200 $2500 $800
Material costs $3500 $3000 $2000 $2500
Energy costs $1000 $1500 $1200 $800
Transportation $250 $2500 $2000 $4500
costs
Overhead costs $1200 $3000 $2500 $500

Solution:
a. Labour productivity of Cincinnati =output /labour
=10000/$3500
=2.8 dollars per units

labour productivity of Frankfurt =output/labour

=12000/$4200
=2.86 dollars per units

labour productivity of Guadalajara=output/labour

=5000/$2500
=2.00 dollar per unit
labour productivity of Beijing =output/labour
=8000/$800
=10 dollars per units

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b. For Cincinnati
Multifactor productivity =output/labour cost+material costs+energy cost +transportation
cost+overhead costs
=10000/$3500+$3500+$1000+$250+$1200
=10000/$9450
=1.06 dollar per unit
For Frankfurt
Multifactor productivity =12000/$4200+$3000+$1500+$2500+$3000
=12000/$14200
=0.86 dollar per unit
For Guadalagara
Multifactor productivity=5000/$2500+$2000+$1200+$2000+$2500
=5000/$10200
=0.4901 dollar per unit
For Beijing
Multifactor productivity=8000/$800+$2500+$800+$4500+$500
=8000/$9600
=0.8333 dollar per unit

c. If Omar industries needed to close one of the plants, I would like to choose Guadalajara
because it provides low productivity than other plants. Hence total factor productivity and single
factor productivity should be considered.

Problem 1-7.
Rushing yardage for three Heisman Trophy candidates is given below. Which candidates is the
most productive running back? How did you measure productivity?

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 Candidates Hall Walker Dyane
Rushing yards 2110 3623 6925
No. of carries 105 875 1186
No. of touchdowns 15 20 70

Solution:
We know,
output
Multi factor productivity (MEP) =
Labor+ Material+ Overhead
Now,
output
Hall (MEP) =
No . of carries+ No . of touchdowns
2110 2110
= = =17.58
105+15 120
output
Walker (MEP) =
No . of carries+ No . of touchdowns
3623 3623
= = =4.05
875+20 895
output
Dyane (MEP)=
No . of carries+ No . of touchdowns
6925 6925
= = =5.51
1186+70 1256
Most productive candidate is “Hall”.

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Problem 1-8. Carpet city recorded the following data on carpet installation over the past week.
Use the data to calculate the average rate (in yards per hour) at which carpet can be installed.

Installation 1 2 3
square yards 1225 1435 2500
No. of workers 4 3 5
No. of hours per worker 3 5 6

Solution:
output 1225 1225
Installation 1: = = = 102.08 hours
input 4 x 3 12
output 1435 1435
Installation 2: = = = 95.67 hours
input 3 x 5 15
output 2500 2500
Installation 3: = = = 83.33 hours
input 5 x 6 30
102.08+ 95.67+83.33
Average Rate =
3
281.08
=
3
= 93.69 (Ans)

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Problem 1-9.

Merrifield post office is evaluating the productivity of its mail processing centers. The centers
differ in the degree of automation, the type of work that can be performed, and the skill of the
workers.

Center 1 2 3
Pieces processed /hr 1000 2000 3000
No. of workers / hr 10 5 2
Hourly wage rate $ 5. 50 $10 $12
Overhead rate / hr $10 $25 $50

Solution:

We know, multi-factor productivity =output ÷Labor + material + overhead

NOW, Center ; 1,pices processed/hr=1000

Labor cost = 10×5.50=55

Overhead cost =10×10=100

MFP=Output÷ Labor cost + overhead = 1000÷55+100=1000÷155=6.45

Center ; 2 , Pieces processed/ hr=2000

Labor cost = 5×10=50

Overhead=5×25=125

MFP=Output ÷ Labor cost + Overhead=2000÷50+125=2000÷175=11.42

Center ; 3 , pieces processed= 3000

Labor cost= 2×12=24

Overhead=2×50=100

MFP=3000÷24+100=3000÷124=24.19

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Problem 1-10.

Posey Ceramics makes ceramic vases for a chain of department stores. The output and cost
figures over the past four weeks are shown here. Labor costs $10 an hour, and materials are $4 a
pound. Calculate the (a) labor productivity (in hrs), (b) material productivity (in lbs), and (c)
multifactor productivity for each week. Comment on the results.

Week 1 2 3 4
Units of Output 2000 4000 5000 7000
No. of workers 4 4 5 6
Hours per week per worker 40 48 56 70
Material (lbs) 286 570 720 1000

Solution:
output
(a) Labor productivity for week 1 =
labor hours (no . of worker ×hour per worker)
2000
=
4 × 40
= 12.5
4000
Labor productivity for week 2 =
4 × 48
= 20.83
5000
Labor productivity for week 3 =
5× 56
= 17.86
7000
Labor productivity for week 4 =
6 ×70
= 16.66
Comment: Labor productivity for week 2 is higher.

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Problem 1-11.
Jack and his friends sell newspaper ads for the Campus Time to supplement their income each
year. From the data below, determine which person is the most productive.

Jack Josh Jennifer John

No. Ads sold 100 50 200 35
No. Hours spend 40 15 85 10

Solution:

We know, labour productivity = Output/Labour hour

For Jack, single factor productivity = Output/Labour hour = 100/40 = 2.5

For josh, single factor productivity = Output/Labour hour = 50/15 = 3.33

For Jennifer, single factor productivity = Output/Labour hour = 200/85 = 2.35

For John, single factor productivity = Output/Labour hour = 35/10 = 3.5

Here, we found that Jhon is the most productive.

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Problem 1-12.

Nicholas is the facilities manager for Green Market Groceries. The store is remodeling and wants
to determine which brand of freezer to use for its frozen foods section. The freezer vary by size,
cabinet type, accessibility, refrigerant, and interlinear. These variables affect both the purchase
cost and the operating cost (e.g., energy consumption) of each freezer. Currently, the cost of
energy per kilowatt hour (kwh) is $0.10. Green Market expenses capital purchases over a three-
year period. Given the cost and capacity data below, calculate the “productivity" (i.e., the cubic
feet of freezer space per dollar) for each freezer alternative. Which freezer brand would you
recommend to Nicholas?

Alaskan Seal Brr Frost Cold Case Deep Freeze

Purchase Cost 3270 4000 4452 5450
Daily Energy 3.61 3.88 6.687 29.87
Consumption
Volume 25 35 49 72

Solution:

Output 3270
Single factor productivity for Alaskan Seal = = =36.23
Labor Hour 3.61 x 25

4000
Single factor productivity for Brr Frost = = 2.46
3.86 x 35

22524452
Single factor productivity for Cold Case = = 13.60
6.68 x 4

6450
Single factor productivity for Deep Freeze = = 2.60
2.07 x 72

Single factor productivity for Alaskan Seal is high.

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