Q1.

Finding the average monthly productivity (units per

hour)
To calculate the monthly productivity averages we need to find the total hours
required for the production of the monthly units and then find the average.
To do that, we need to multiply the Hours per machine column by the number of
machines to get the total hours of machine required for the production and then find
the monthly average by dividing the total hours required by the number of units
produced.
Dimension
Units Produced
Hours per Machine
Number of Machines
Total Hours Required
Monthly Average (units/hr)

Jan

Feb

Mar

Apr

Total

2300
325
3
975

1800
200
5
1000

2800
400
4
1600

3000
320
4
1280

9900
1245
3.90*
4855

2.36

1.80

1.75

2.34

2.04

* calculated as the average of the monthly machines available

Q5 Partial and Multifactor productivity

To calculate the required productivities, we need to divide the number of units by
the total amount of the required dimension.

Sales (units)
Labor (hours)
Raw material ($)
Capital equipment (hours)
Labor
productivity
(units/labor.hr)
Capital
Productivity
(units/capital.hr)
Capital+ labor productivity
Raw
material
productivity

US
100,000
20,000
20,000
60,000

LDC
20,000
15,000
2,000
5,000

5.00

1.33

1.67

4.00

1.25
5.0

1.00
10.0

(units/$)

a. Partial labor and capital productivities

The productivity amounts are calculated in the table as per the discussion in the
beginning of the solution. According to the figures, it is clear that the indicators lead
us to contradicting conclusions; according to labor productivity, US seems much
better, according to capital productivity the LDC seems better.

b. Multifactor labor and capital productivity

According to the multifactor productivity, the US facility seems a little bit better than
the LDC. However, this difference isnt as huge as it is in the partial productivity
indicators as can be seen in the table. This is because the multifactor productivity
indicator balances both figures.

c. Raw material productivity

Finally, raw material productivity is calculated after converting the raw material
amount into US dollars ($) by dividing the FC currency by ten. According to the
numbers, the LDC facility can produce units at 50% the cost of the US facility in
terms of raw material.

Timbuk2 Case
1. What are the key competitive dimensions for messenger and
laptop bags?
Messenger Bags
The main competitive dimensions for the messenger bags are customizability,
various designs, quality and creativity in design.

Laptop Bags
The main competitive dimensions for laptop bags are basically standard designs,
price competition, strength of material and quality of material.

2. Compare the two facilities

Dimension
Volume rate
Labor skill
Level
automation
Raw materials

3.

San Francisco
JIT required while maintaining
moderate rates
Very highly skilled labor is
required
of Less
Less inventory

China
Higher production rates
are required
Medium skills required
More
High inventory