Operations Management

Midterm
Ahmed Essam Kamal – Group
2SH

Dr. Mohamed Essam Khedr

 Question One:

a. Answer

Multifactor Productivity for Center 1 =1000/(10*5.50 +10)=15.38

Multifactor Productivity for Center 2 =2000/(5*10 + 25)= 26.67

Multifactor Productivity for Center 3 =3000/(2*12 + 50)=40.54

b. Answer
Multifactor Productivity for Center 3 with new machines =5000/(2*12 + 80)=48.07

According to the above results, it seems installing new Machines for Center 3 has increased the
productivity (48.07> 40.54) by almost (48.07-40.54)/40.54 *100 = 18.57 %

Question Two

a. Answer

BEPx= F/(P-V) = 15400/(1.10-.25)= 18117.64 units

As the Break-Even is happening when Total revenue equals Total Cost; Then, This will be achieved
when producing ~ 18178 units

b. answer

BEPx = = F/ (P –V) = 15400 / (0.99 - 0.25)= 20810.81 units

 As the Break-Even is happening when Total revenue equals Total Cost; Then, This will be
achieved when producing ~ 20,811 units. As David will stabilize his customer base at 250
shirts per day, it will take him 20811/250=83.25 ~84 days to get to break-even point
 Based on the above calculations, If the price decreased that would mean David’s project
would have to produce more units in order to reach Break-even where Total revenue equals
Total Cost . Additionally, if the demand on the product is less than 20811 units, That would
mean TR < TC and project is losing. On the other side, if we kept price on 1.1 $ , David will
have to produce less units in order to reach break-even and also if the product demand is
less than 20811 units, Then David is achieving profit .

Question Three

− What explains the company’s point of view?

As mentioned earlier , Productivity equation equals Output over Input . In such way, Increasing
productivity of employees means increasing the number of complains that is being handled by same
numbers of employees which deemed theoretically improving the efficiency of the employees and

C2 General
 increasing the Productivity (i.e instead of handling 10 complaints/day per 10 employees , Same 10
employees will handle 15 complains/day)

To a systems thinker, there is something wrong with this point of view. What is amiss?

Counting on only single factor of inputs, will always result in drawbacks in other areas. To elaborate
more, System thinker has to consider Multi-factor productivity such as over time cost , extra
electricity expenses , .. Which may lead to defect in other areas.

Meanwhile, Increasing No. of complaints handled by employees looks a good sign of increasing the
productivity BUT this also means there is defect in my product and as system thinker would be
happier to get less no. of complaints.

C2 General