Tel.

787-766-1717
Ext. 6255
Fax. 787-763-7791
PO Box 21150
San Juan, PR 00928-1150
Escuela de Negocios https://umet.suagm.edu/
negocios

MANA 720 Production and Operations Management.

Case#1. Lecture 1.
Assigned: August 22, 2020.
Due Date: August 29, 2020.

1. (50%). A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following
results:
U.S. LDC
Sales (units) 100,000 20,000
Labor (hours) 20,000 15,000
Raw materials (currency) $20,000 FC 20,000
Capital equipment (hours) 60,000 5,000

a. (10%). Calculate partial labor and capital equipment productivity figures for the parent and subsidiary.

Labor Productivity

Output Input in Productivity

Country
in Units Hours (Output/Input)
U.S. 100,000 20,000 100,000/20,000 = 5
20,000/15,000 =
LDC 20,000 15,000
1.33

Capital Equipment Productivity

Output Input in Productivity

Country
in Units Hours (Output/Input)
U.S. 100,000 60,000 100,000/60,000 = 1.67

LDC 20,000 5,000 20,000/5,000 = 4

(5%). Do the results seem misleading?

The results seem misleading. Since the labor productivity in U.S is higher than LDC which results as contradictory.

Yesenia Cruz Cantillo, PhD. Page 1 of 4

 Tel. 787-766-1717
Ext. 6255
Fax. 787-763-7791
PO Box 21150
San Juan, PR 00928-1150
Escuela de Negocios https://umet.suagm.edu/
negocios

b. (10%). Compute the multifactor productivity figures for labor and capital together.

Multifactor – Labor and Capital Equipment

Output in Input in Productivity

Country
Units Hours (Output/Input)
U.S. 100,000 20,000 + 60,000 = 80,000 100,000/80,000 = 1.25

LDC 20,000 15,000 + 5,000 = 20,000 20,000/20,000 = 1

(5%). Do the results make more sense?

The results make more sense since labor and equipment can be substituted for each other. That being so, this multifactor
measure is a better indicator of productivity in this instance.

c. (10%). Calculate raw material productivity figures (units/$ where $1 = FC 10).

Raw Material Productivity

Output in Input in Productivity

Country
Units Dollars (Output/Input)
U.S. 100,000 $20,000 100,000/20,000 = 5.00

LDC 20,000 FC $20,000/10 = $2,000 20,000/2,000 = 10.00

(10%). Explain why these figures might be greater in the subsidiary.

The raw material productivity measures might be greater in the LDC due to a reduced cost paid for raw
materials, which is typical of LDC’s.

Yesenia Cruz Cantillo, PhD. Page 2 of 4

 Tel. 787-766-1717
Ext. 6255
Fax. 787-763-7791
PO Box 21150
San Juan, PR 00928-1150
Escuela de Negocios https://umet.suagm.edu/
negocios

Yesenia Cruz Cantillo, PhD. Page 3 of 4

 Tel. 787-766-1717
Ext. 6255
Fax. 787-763-7791
PO Box 21150
San Juan, PR 00928-1150
Escuela de Negocios https://umet.suagm.edu/
negocios

1. Consider the two categories of products that Timbuk2 makes and sells. For the custom messenger bag, what are the
key competitive dimensions that are driving sales? Is its competitive priorities different for the new laptop bags
sourced in China?
- The key competitive dimensions that are driving sales for the custom messenger bags are:
 Best known for high quality bags
 Lifetime warranty
 Timbuk2 do-not use materials considered toxic by the global
 Blue sign verified
 Job outsourced to China, Vietnam and Indonesia
 Mass customization adds more cost to the bags
 Bags produced locally adds 30% more cost to it
 Competitive market (other companies are producing high quality bags, cheaper, trendy and stylish)

Yesenia Cruz Cantillo, PhD. Page 4 of 4