Seminar 1

1.  A health-check clinic has five employees and 'processes' 200 patients

per week. Each employee works 35 hours per week. The clinic's total

wage bill is £3,900 and its total overhead expenses are £2,000 per week.

What are the clinic's single-factor labor productivity and its multi-factor

productivity?
2. John Lucy makes wooden boxes in which to ship motorcycles. John and

his three employees invest total of 40 hours per day making the 120

boxes.

a)What is their productivity?

b) If they can increase the rate to 125 per day, what will be their new

productivity?

c) What will be their percentage in productivity and percentage

change?
3.  This year Oswal Inc. will produce 57600 hot water heaters. Each
employee works 160 hours per month. If the labor productivity is 0.15

hot water heaters per labor hours, how many laborers are employed at

the plant?
4. Eric Jonson Makes billiard balls. He would like to know if his organization

can increase productivity by 3%. He has the following data:

Last year Now Cost

Units produced 1000 1000

Labor (hours) 300 275 10$ per hour

Resin (pounds) 50 45 5$ per pound

Capital invested ($) 10000 11000 1% per month

of investment
Energy(BTU) – British 3000 2850 0.50$ per BTU
thermal units*~1050 joules
5. Douglas Kosb is baker. Demands increase by 25%. He made 1500
loaves per month. Labor productivity was 2.344 loaves per labor/hour.
How many workers will Douglas need to add? (160 labor hours per
month.)
6. The pay will be 8$ per hour. He also will purchase one blender (cost
100$ per month). But he will achieve the same output if he increases
labor hours. Which is the best decision?
a) By increasing labor hours from 640 to 660 Or By increasing in
investment?
b) Show the percent productivity change for labor and investment.
7.  The output of a process is valued at 100$ per unit. The cost of labor is
50$ per hour including benefits. The accounting department provided
the following information about the process for the past four week:

Week 1 Week 2 Week 3 Week 4

Units 1124 1310 1092 981
produced
Labor ($) 12735 14842 10603 9526
Material ($) 21041 24523 20442 18364
Overhead ($) 8992 10480 8736 7848
a) Use the multifactor productivity ratio to see whether recent
process improvements had any effect and, if so, when the effect
was noticeable;
b) Has labor productivity changed? Use the labor productivity ratio
to support your answer.
8. 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 80 percent are considered good enough
to sell. The other 20 percent are scrapped due to quality problems
that are identified after they have completed the production process.
Each guitar sells for $250 and required only 10 labor hours. Each
employee works an average 160 hours per month. Labor is paid at
10USD/hour, materials cost is 40 USD/guitar, and overhead is 4000$.

a) Calculate the labor and multifactor productivity ratios.

b) After some study, the operations manager Daren Funk recommends 3
options to improve the company’s multifactor productivity: (1) increase
the sales price by 10 percent; (2) improve quality so that only 10 percent
are defective, or (3) reduce labor, material, and overhead costs by 10
percent. Which option has the greatest impact on the multifactor
productivity measure?