YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)

Module 1- Productivity, Competitiveness, and Strategy (Illustrations)

I. Sample Problem 1
Problem:

Assuming a 40-hour week and hourly wages of $15, compute for weekly productivity using a multifactor measure. Material cost is
$6 per pound while overhead is 1.5 times weekly labor cost.

Week Output (units) Workers Material (lbs)

1 30,000 6 410
2 33,600 7 480
3 32,200 7 470
4 35,400 8 490

Answer:

Week Output Labor Cost Material Cost Overhead Cost Total Cost Productivity
1 30,000 3,600 2,460 5,400 11,460 2.62
2 33,600 4,200 2,880 6,300 13,380 2.51
3 32,200 4,200 2,820 6,300 13,320 2.42
4 35,400 4,800 2,940 7,200 14,940 2.37

Solution:

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YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Module 1- Productivity, Competitiveness, and Strategy (Illustrations)
II. Sample Problem 2
Problem:

Worker A produced 170 units while working 40 hours. Previously worker A produced 138 units for 38 hours. Compute for the
productivity change? Analyze your answer.

Answer:

Productivity Last Week 3.63 units per hour

Productivity This Week 4.25 units per hour
Productivity Change 17%

Solution:

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YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Module 1- Productivity, Competitiveness, and Strategy (Illustrations)
III. Sample Problem 3
Problem:

A company that makes shopping carts for supermarket and other stores recently purchased some new equipment that reduces
the labor content of the jobs needed to produce the shopping cart. Prior to buying the new equipment, the company used 7
workers, who produced an average of 90 carts per hour. Workers receive $20 per hour, and machine cost was $40 per hour. With
the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $10
per hour while output increased by 10 carts per hour.

Required:
A. Compute productivity under each system. Use carts per worker per hour as the measure of labor productivity.
B. Compute the multifactor productivity under each system. Use carts per dollar cost (labor + equipment) as the measure.
C. What is the productivity change for A and B?

Answer:

A. Compute productivity under each system. Use carts per worker per hour as the measure of labor productivity.
Manual system 12.86
System with new equipment 16.67

B. Compute the multifactor productivity under each system. Use carts per dollar cost (labor + equipment) as the measure.
Manual system 0.50
System with new equipment 0.59

C. What is the productivity change for A and B?

A 0.30 or 30%
B 0.18 or 18%

Solution:

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YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Module 1- Productivity, Competitiveness, and Strategy (Illustrations)
III. Sample Problem 4
Problem:

The following table shows data on the average number of customers processed by several bank service units each day. The hourly
wage rate is $25, the overhead rate is 1.0 times labor cost and material cost is $5 per customer.

Unit Employees Customers Processed

A 4 36
B 5 40
C 8 60
D 3 20

Answer:

Productivity
Overhead Multifactor Productivity
Unit Wage Cost Material Cost Total Cost per Labor
Cost Productivity per Worker
Cost
A 800 800 180 1,780 0.02 9.00 0.05
B 1,000 1,000 200 2,200 0.02 8.00 0.04
C 1,600 1,600 300 3,500 0.02 7.50 0.04
D 600 600 100 1,300 0.02 6.67 0.03

Solution:

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YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
Module 1- Productivity, Competitiveness, and Strategy (Illustrations)
III. Sample Problem 5
Problem:

An electronics company makes communication devices for military contracts. The company just completed two contracts. The
navy contract was for 2,300 devices, and took 25 workers two weeks (40 hours per week) to complete. The army contract was
froM 5,500 devices that were produced by 35 workers in three weeks.

Answer:

A. Compute the productivity per worker per week, and productivity per labor hour
Navy Contract 46.00 1.15
Army Contract 52.38 1.31

B. Which contract were the workers more productive? Army Contract

Solution:

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