IEDA 2010, Fall 2020 Assignment 2

Question 1 Productivity
A sandwich firm’s financial data for the past two years are as follow (in the unit of $1,000).

2018 2019
Output Sales 200 220
Input Labor 30 40
Raw Materials 35 45
Energy 5 6
Capital 50 50
Other 2 3

(a) Calculate the single-factor productivity of Energy for the past two years.
(b) Calculate the multi-factor productivity of Labor, Capital and Raw Materials for the past
two years.
(c) Calculate the total-factor productivity for the past two years.

Solution:

(a) Single-factor productivity (SFP): output/(single input)

Year 2018:

Energy: output/energy = 200,000/5,000 = 40.00

Year 2019:

Energy: output/energy = 220,000/6,000 = 36.67

(b) Multi-factor productivity (MFP): output/(multiple inputs)

Year 2018:

200,000/(30,000+35,000+50,000) = 1.74

Year 2019:

220,000/(40,000+45,000+50,000) = 1.63

(c) Total-factor productivity = output/total input

Year 2018:

200,000/(30,000+35,000+5,000+50,000+2,000) = 1.64
Year 2019:

220,000/(40,000+45,000+6,000+50,000+3,000) = 1.53

Question 2 Process Analysis

The Subway shop in the university takes sandwich order from 8 a.m. to 6 p.m. everyday. There
are three employees working on different tasks in this shop. The first employee spends 1 minute
in taking order from a customer. The second employee slices and bakes bread. He spends 3 minutes
on each order. The last employee adds the topping and packs it. He spends 4 minutes on each order.
Suppose that you are the shop manager, you want to analyze this process.

(a) Draw a flow diagram for this system and find the capacity of the current system.
(b) If you add one employee, which task should you assign him to? What is the capacity of
the system now?
(c) For the original system (with 3 employees), is there any benefit if we can shift 1 minute
work load from the second person to the first one?
(d) For the upgraded system (with 4 employees by your suggestion in (b)), is there any
benefit if we can shift 1 minute work load from the second person to the first one?

Solution
(a)

Station1 Station2 Station3

Process time 1 min 3 min 4 min

capacity 60 /hr 20 /hr 15 /hr

Bottleneck

The capacity of the system is 15/hr.

(b)
We should add him at station 3. Capacity of the station 3 is 2*1/4 = 0.5/min = 30/hr. After adding
him, the station 2 becomes the bottleneck, and the capacity of the system would be 20 /hr.

(c)
Capacity of the station 1: 1/2 = 0.5/min = 30/hr
Capacity of the station 2: 1/2 = 0.5/min = 30/hr
Capacity of the station 3: 1/4 = 0.25/min = 15/hr
There is no benefit if we shift 1 minute from the second person to the first one, because the
station 3 is still the bottleneck.
(d)
Capacity of the station 1: 1/2 = 0.5/min = 30/hr
Capacity of the station 2: 1/2 = 0.5/min = 30/hr
Capacity of the station 3: 2/4 = 0.5/min = 30/hr
The current capacity of this system = 30/hr > 20/hr.
There is benefit if we shift 1 minute from the second person to the first one.

Question 3 Little’s Law

The IEDA department is processing postgraduate student applications. Typical processing time for
one application is 2 weeks. The department can process 12 applications per week. The department
is trying to improve efficiency by reduce the processing time to 3 days. Staff work 5 days a week.
What is the reduction of applications under review after the efficiency improvement?

Solution:
According to Little’s Law, 𝐼 = 𝑅 × 𝑇
The current system: flow rate = 12 applications/week , flow time = 2 weeks,
Inventory = 12 ∗ 2 = 24 applicaitons
After the improvement: flow rate = 12 applications/week, flow time = 3/5 week,
3
Inventory = 12 ∗ 5 = 7.2 applications
Inventory reduction: 24-7.2 = 16.8 applications

Question 4 CPM
A construction company is going to build a new theme park. This project involves lots of
activities and the table below shows the activities, time, and sequences required:

Activity Preceding Activity Time (Month) Time (Month) Cost $ Cost $

Normal Crash Normal Crash
A - 3 2 7,000 9,000
B A 2 1 8,000 12,000
C A 4 2 9,000 12,400
D BE 4 3 4,000 7,000
E A 2 1 6,000 10,000
F C 3 1 10,000 13,500
G HIF 3 2 11,000 15,000
H CD 5 3 12,000 13,700
I E 4 3 13,000 16,200
 (a) Draw the network diagram of this project.
(b) What is the critical path(s) and the length of it under the normal time and cost? What is
the total cost of the project?
(c) Suppose the company receives $3,000 bonus for each month shorter than the estimated
completion time of the project. (Every month cannot exceed $3,000). The cost to crash
the require time for the activities are shown in the table. What activities do you need to
shorten to minimize net cost?
(d) What is the new critical path(s) and earliest completion time of the project in part(c)?
What are the new cost before receiving the bonus, the total bonus received, and the final
net cost?

Solution:
(a) Network diagram:

(b) A, E, D, H, G and A, B, D, H, G with length of 17 months. The total cost of the project is
$80,000
Activity Preceding Month Month Cost $ Cost $ Per
Activity Normal Crash Normal Crash Month
A - 3 2 7,000 9,000 2,000
B A 2 1 8,000 12,000 4,000
C A 4 2 9,000 12,400 1,700
D BE 4 3 4,000 7,000 3,000
E A 2 1 6,000 10,000 4,000
F C 3 1 10,000 13,500 1,750
G HIF 3 2 11,000 15,000 4,000
H CD 5 3 12,000 13,700 850
I E 4 3 13,000 16,200 3,200
(c) B E G I will not be considered.
Crash the cheapest one among all the possible project first. The process should be:
S1: crash H by 2 months
S2: crash A by 1 month
S3: crash D by 1 month
(d) The new critical paths are:
AEDHG
ABDHG
And the completion time is 13 month
The total crash cost: 2000+3000+850*2 =6,700
The new cost before receiving the bonus: 86,700
The total bonus received : (17 – 13) * 3000 = 12,000
The total saving is: 12,000-6700=5,300
The final net cost: 86700-12000=74700