Mgmt120

ManagementofOperations
ProblemReviewforUnit1Fundamentals
Thissectioncontainsstudyproblemsforthefollowingtopics.
Time,Rate,andProductivity
InventoryMeasures
Answersforalltheproblemsarefoundinthebackofthissection.

ReviewproblemsforFundamentals

ReviewProblemsforFundamentals

1.A3personcrewoftelemarketingemployeesmade200phonecallsina4hourtime
block.Whatwastheirindividualaverageproductivityincallsperhour?Whatwasthe
crewproductivity?

2.Inanassemblyoperationatafurniturefactory,sixemployeesassembledan
averageof450standarddiningchairsper5dayweek.Whatisthelaborproductivityof
thisoperation?

3.Theweeklyoutputofafabricationprocessisshownbelowtogetherwithdatafor
laborandmaterialinputs.Standardsellingpriceis$125perunit.Overheadischargedat
arateof$1500plus.5timesdirectlaborcost.Assumea40hourworkweekandan
hourlywageof$16perhour.Materialcostis$10perlinearfoot.Whatisthemultifactor
productivity?
Output(units)
392

Numberofworkers
5

Material(ft)
2720

4.Acompanyhasintroducedaprocessimprovementthatreducesprocessingtimefor
eachunitsothatoutputisincreasedby25%withlessmaterialbutoneadditionalworker
required.Undertheoldprocess,fiveworkerscouldproduce60unitsperhour.Labor
costsare$12/hourandmaterialinputwaspreviously$16/unit.Forthenewprocess,
materialisnow$10/unit.Overheadischargedat1.6timesdirectlaborcost.Finished
unitssellfor$31each.Whatincreaseinproductivityisassociatedwiththeprocess
improvement?(Useaperhourcostbasis)
Time,Rate,andProductivity1

ReviewProblemsforExam1

5.Computetimeandrateforeachofthefollowing.
a.10customersareservedin2hours
b.amachinecanprocess296partsperhour
c.ittakes37minutestoprocessaloanapplication
d.Threeemployeeseachspent4hoursandaltogethertheycleaned8apartments.

Time,Rate,andProductivity2

ReviewProblemsforFundamentals

6.JoanPontius,thematerialsmanageratMoneyEnterprises,isbeginningtolookfor
waystoreduceinventory.Arecentaccountingstatementshowsinventoriesatthe
followinglevels.
Rawmaterials: $2,345,000
Workinprogress: $5,670,000
FinishedGoods: $2,161,000
Thisyear'scostofgoodssoldshouldbeabout$29.4million.Assuming52business
weeksperyear,expresstotalinventoryas:
a.weeksofsupply

b.inventoryturns

7.Oneproductlineisexperiencing7turnsperyear,anditsannualsalesvolume(at
cost)is$750,200.Howmuchinventoryisbeingheld,ontheaverage?

8.MINC,Inc.keeps4itemsinstock,threemachinesandarepairkit.Thecurrent
inventorylevelandlastyearsdemandareshownbelowalongwiththevalueoftheitems.
(Assume52weeksperyear.)
Lastyear's Currently
Value
demand
onhand
ofitem
Model1
17,000
2500
$200
Model2
15,000
1500
$300
Model3
8,500
2000
$150
Repairkits
450
100
$24.00
a.Howmanyweeksofsupplydotheycurrentlyhaveonhand?
Answers3

ReviewProblemsforExam1

b.Ifthecurrentinventorylevelischaracteristic,howmanyturnsperyeardoesMINC
Inc.have?
Answers:
1.individual:==16.7calls/hr
crew:=50calls/hr
2.==15chairs/day
3.Laborcost=40x16x5=3200
multifactorproductivity=
===1.46
4.Useaperhourcostbasis.
Oldmethod:laborcost=$12/workerx5workers=$60/hr
prod.===1.667
Newmethod:laborcost=$12/workerx6workers=$72/hr
prod.===2.48
Improvementinproductivity==48.8%
5.a.time=12minutespercustomeror.2hours/customer
rate=5customers/hror.08333customer/sperminute
b.time=.0034hrsperpartor.203minutesperpart
rate=296parts/hror4.933partsperminute
c.time=37minutesperapplicationor.617hrs/app
rate=1.62apps/hror.027apps/min.
d.time=1.5hrs/aptor90min/apt
rate=.667apts/hror.011apts/min

6.averageaggregateinventoryvalue=$10,176,000
weeklysales==.565mill/week
weeksofsupply==17.9918weeksofsupply
inventoryturns==2.892.9turnsperyear
7.turns=
7=
8.

Thusave.aggr.inventoryvalue==107,171107,000

Answers4

ReviewProblemsforFundamentals

Model1
Model2
Model3
Repair
kits

Lastyear's
demand

Currently
onhand

Value
ofitem

Valueon
hand

17,000
15,000
8,500

2500
1500
2000

$200
$300
$150

$500,000
$450,000
$300,000

450

100

$24.00

$2400

Yearly
valuein
sales
$3.4mill
$4.5mill
$1.275
mill
$.0108
mill

Ave.aggr.inventoryvalue=$1.2524mill.
Annualsales=$9.185mill.
weeklysales==$.176650mill
weeksofsupply==7.097weeksofsupply
turns==7.33turnsperyear

Answers5