EMBA 615

Spring 2020

Case Study
1) How has global competition affected productivity?

2) The Abco Company manufactures electrical assemblies. The current process uses 10 workers and
produces 200 units per hour. You are considering changing the process with new assembly methods that
increase output to 300 units per hour, but will require 14 workers. Particulars are as follows:

CURRENT PROCESS NEW PROCESS

OUTPUT (UNITS / HOUR) 200 300

NUMBER OF WORKERS 10 14

MATERIAL COST / HOUR $120 $150

Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs.
Finished switches sell for $20 / unit.

a. What is the multifactor productivity of current process.

b. What is the multifactor productivity of new process.
c. Based on your answer in a, b above, what decision should be made.

3) Mention three mission statements of any three Saudi companies. Which stakeholders they
addressed in their mission? Which one of the three you like the most, WHY?

4) The sales team has just finished creating a process chart of the sales-call process. After fifteen
minutes of high-fiving, they decide to tape the flowchart to the conference room wall and stand
back a safe distance admiring the many symbols on the chart. You join them, and while you
don't know much about sales calls, your expertise in process analysis and improvement is well-
respected. What would you look for in the chart that would let you know whether their sales-
call process was well-conceived?

5) What is the long-term impact of unethical business practices on product and service quality?
6) A simple CPM network has five activities, A, B, C, D, and E. A is an immediate predecessor
of C and of D. B is also an immediate predecessor of C and of D. C and D are both immediate
predecessors of E. Draw the network path for this project.

7) Draw the critical path for the network activities shown below.
What is the duration of the critical path.
________.
Activity Duration Immediate Predecessors
A 4 --
B 2 A
C 7 --
D 4 A
E 5 B,C,D

Q8). Assume that a project manager expects to finish a project in 21 days as shown in the table
below. However, the owner of the project wants it in 14 days and any period after 14 days the
project manager has to pay penalty cost of $100 per day. Indirect project costs = $250 per day.

Project Activity and Cost Data

Activity Normal Time Normal Cost Crash Time Crash Cost Immediate
(days) ($) (days) ($) predecessor(s)
A 5 1000 4 1200 -
B 5 800 3 2000 -
C 2 600 1 900 A, B
D 3 1500 2 2000 B

E 5 900 3 1200 C, D
F 2 1300 1 1400 E
G 3 900 3 900 E
H 5 500 3 900 G

a. Determine the critical path for this project.

b. Show the first two stages of crashing (which activity) and the cost before and after crash.

Original costs: Normal Total Costs = Total Indirect Costs = Penalty Cost = Total Project Costs =
$7,500 $250 per day × 21 days = $5,250 $100 per day × 7 days = $700 $13,450
Step 1: The critical path is , and the project duration is B–D–E–G–H 21 days.
Step 2: Activity E on the critical path has the lowest cost of crashing ($150 per day). Note that
activity G cannot be crashed.
Step 3: Reduce the time (crashing 2 days will reduce the project duration to 19 days) and re-
calculate costs:
 Costs Last Trial = $7,500
Crash Cost Added = $150 × 2 days = $300
Total Indirect Costs = = $250 per day × 19 days = $4,750
Penalty Cost = $100 per day × 5 days = $500
Total Project Cost = $13,050 .
(step 4) Repeat
(step 2) Activity H on the critical path has the next lowest cost of crashing ($200 per day). (step
3) Reduce the time (crashing 2 days will reduce the project duration to 17 days) and re-calculate
costs: Costs Last Trial = Crash Cost Added = Total Indirect Costs = Penalty Cost = Total Project
Cost = $7,500 + $300 (the added crash costs) = $7,800 $200 × 2 days = $400 $250 per day × 17
days = $4,250 $100 per day × 3 days = $300 $12,750
(step 2) Activity D on the critical path has the next lowest crashing cost ($500 per day). (step 3)
Reduce the time (crashing 1 day will reduce the project duration to 16 days) and re-calculate
costs: Costs Last Trial = Crash Cost Added = Total Indirect Costs = Penalty Cost = Total Project
Cost = $7,800 + $400 (the added crash costs) = $8,200 $500 × 1 day = $500 $250 per day × 16
days = $4,000 $100 per day × 2 days = $200 $12,900 which is greater than the last trial. Hence
we stop the crashing process.