Lesson 03 Productivity, Competitiveness, & Strategy Solutions Solved Problem #1: see text book Solved Problem #2:

see textbook #1: Suppose that a company produced 300 standard bookcases last week using 8 workers, and that it produced 240 bookcases the week before using 6 workers. a. Compute the labor productivity per person for each of the two weeks. Week before: Last week: b. 240/6 = 40 book cases per person 300/8 = 37.5 book cases per person

On the basis of your calculations, what can you conclude about the crew size which yields the highest productivity? In other words, would you recommend a crew size of 6 or 8 people? 6 people per crew

#2: The manager of a crew that installs carpeting has tracked the crew's output over the past several weeks, obtaining the figures below. a. Compute the labor productivity per person for each week and show your answer in the space provided.

Week 1 2 3 4 5 6

Crew Size 4 3 4 2 3 2

Yards Installed 960 702 968 500 696 500

Labor Productivity 240 234 242 250 232 250

b.

On the basis of your calculations, what can you conclude about the crew size which yields the highest productivity? In other words, would your recommend a crew size of 2, 3 or 4 people? 2 people per crew

#3: Compute the multifactor productivity (sales $ per week) for each of the weeks shown below with the following information: Hours per week 40, Hourly labor wage - $12, Overhead 1.5 * weekly labor cost, Material cost per pound $6, and Sales price per unit - $140.

Week 1 2 3 4 5 6 7

Output (units) 300 338 322 354 222 265 310

Workers 6 7 7 8 5 6 7

Material (lbs) 45 46 46 48 40 42 46

Multifactor Productivity $5.62 $5.45 $5.20 $5.01 $4.98 $4.98 $5.00

#4: A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers who produced an average of 80 carts per hour. Workers receive $10 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer 1 of the workers to another department, and equipment cost increased by $10 per hour while output increased by 4 carts per hour. a. Compute labor productivity before and after the new equipment. Use carts per worker as the measure of labor productivity.

Case Before After b.

Output (units) 80 84

Workers 5 4

Labor Productivity 16 21

How much did labor the productivity increase or decrease after the new equipment was purchased? Round to the nearest whole percent. Increased 31%

c.

Compute the multifactor productivity before and after the new equipment. Use carts per dollar cost (labor + equipment) as the measure.

Case Before After d.

Output (units) 80 84

Workers 5 4

Machine Cost $40 $50

Multifactor Productivity 0.89 0.93

How much did the multifactor productivity increase or decrease after the new equipment was purchased? Round to the nearest whole percent. Increased 5%

#5: An operation has a 10% scrap rate. As a result, 72 pieces per hour are produced. What is the potential increase in labor productivity that could be achieved by eliminating the scrap? Round to the nearest whole percent. 11% (8/72) #6: A manager checked production records and found that a worker produced 160 units while working 40 hours. In the previous week, the same worker produced 138 units while working 36 hours. Answer the following using units per hour as the productivity measure. a. What was the most current week productivity? Round to the nearest tenth of a percent. 4 units per hour b. What was the previous week productivity? Round to the nearest tenth of a percent. 3.8 units per hour c. Did the productivity increase, decrease, or remain the same from the previous week to the current week? If it increased or decreased indicate how much. Round to the nearest tenth of a percent. Increased by 5.3% #7: The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the results shown below. a. Calculate the labor productivity for each crew size (units per person). Round to the nearest tenth of a percent. Crew Size 2 4 3 3 4 2 b. Yds. Installed 716 1298 1017 1002 1278 702 Labor Productivity 358.0 324.5 339.0 334.0 319.5 351.0

On the basis of your calculations, what crew size would you recommend? 2