2.6 Chapter Problems
Problem #1
Billco Windows and Doors is preparing its monthly productivity report. Their monthly costs are shown below. Calculate the:
a) Labour productivity (output ÷ labour hours)
b) Machine productivity (output ÷ machine hours)
c) The multifactor productivity (output ÷ (labour cost + material cost + energy cost)) of dollars spent on labour, materials, and energy. The average labour rate is $18.00.
Units produced: 1800
Labour hours: 1975
Machine hours: 425
Materials cost: $81000
Energy cost: $21600
Solution
a) Labour productivity (output ÷ labour hours)
= 1800 ÷ 1975
= 0.91 units per labour hour
b) Machine productivity (output ÷ machine hours)
= 1800 ÷ 425
= 4.23 units per machine hour
c) Multifactor productivity (output ÷ (labour cost + material cost + energy cost))
= 1800 ÷ ((1975 × $18) + $81000 + $21600)
= 0.013 units per dollar spent
Problem #2
A company makes seasonal jams and jellies. Yesterday they produced 520 jars of jam with five workers who each worked an 8-hour day. What was the labour productivity?
Solution
= 520 ÷ 5 workers × 8 hours
= 13 jars per worker hour
Problem #3
A greeting card company manufactured 3500 cards in one day. Labour cost was $1200, material cost was $90, and overhead was $450. What is the multifactor productivity?
Solution
= 3500 ÷ ($1200 + $90 + $450)
= 2.01 cards per dollar of input
Problem #4
Joe has purchased a pizza franchise and is learning how to measure productivity. Calculate the:
a) Food cost productivity
b) Labour productivity
c) Total productivity
Also, calculate the percent change for each measure.
| Measure | June | July |
|---|---|---|
| Sales | $52500 | $59650 |
| Food cost | $15750 | $16702 |
| Labour cost | $11550 | $14912 |
| Overhead cost | $3500 | $3500 |
Solution
|
Question |
June |
July |
% Change |
|---|---|---|---|
|
a) Food cost productivity |
52500 ÷ 15750 |
59650 ÷ 16702 |
(3.57 − 3.33) ÷ 3.33 × 100 |
|
b) Labour productivity |
52500 ÷ 11550 |
59650 ÷ 14512 |
(4.11 − 4.55) ÷ 4.55 × 100 |
|
c) Total productivity |
52500 ÷ (15750 + 11550 + 3500) |
59650 ÷ (16702 + 14512 + 3500) |
(1.72 − 1.70) ÷ 1.70 × 100 |
“2 Operations Strategy and Competitiveness” from Introduction to Operations Management Copyright © by Hamid Faramarzi and Mary Drane is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.—modifications: used End of Chapter Problems section.
