Chapter 1 Homework Answers

MGNT 3430: Operations Management
Fall 2014
Homework 1 Answers

Discussion Questions
Q6 (p. 25). Although all nine of the competitive priorities discussed in this chapter are relevant to a company’s success in the marketplace, explain why a company should not necessarily try to excel in all of them. What determines the choice of the competitive priorities that a company should emphasize for its key processes?
Answer. It is often not a good idea for a company to try to excel in all of the competitive priorities because it is generally impossible to do so. Mediocrity is a predictable result. The choice and the minimum level of one or more of the competitive priorities are set by the order qualifiers for the particular product or service. The choice of the competitive priorities that the company should emphasize is usually governed by the company’s strategy driven by its mission statement and the core competencies that the company wants to harness to seek the best competitive advantage.

Problems
Q2 (p. 26). Suds and Duds Laundry washed and pressed the following numbers of dress shirts per week.
Week

Work Crew

Total Hours

Shirts

1

Sud and Dud

24

68

2

Sud and Dud

46

130

3

Sud, Dud and Jud

62

152

4

Sud, Dud and Jud

51

125

5

Dud and Jud

45

131

a. Calculate the labor productivity (i.e., partial productivity) ratio for each week.
b. Explain the labor productivity pattern exhibited by the data.
Answer.
a. Labor productivity
Week

# of Workers

Input (Labor-hours)

Output (Shirts) Output/Input Ratio

1

2

24

68

2.83 shirts/hours

2

2

46

130

2.83 shirts/hours

3

3

62

152

2.45 shirts/hours

4

3

51

125

2.45 shirts/hours

5

2

45

131

2.91 shirts/hours

b. Output per person does not vary much whether it is Sud, Dud, or Jud working. Productivity declines when all three are present. Perhaps there isn’t enough work to keep three persons occupied, or perhaps there is not enough work space or equipment to accommodate three workers. Q3 (p. 26). CD players are produced on an automated assembly line process. The standard cost of CD players is $150 per unit (labor, $30; materials, $70; and overhead, $50). The sales price is
$300 per unit.
a. To achieve a 10 percent multifactor productivity improvement by reducing materials costs only, by what percetange must these costs be reduced?
b. To achieve a 10 percent multifactor productivity improvement by reducing labor costs only, by what percetange must these costs be reduced?
b. To achieve a 10 percent multifactor productivity improvement by reducing overhead costs only, by what percetange must these costs be reduced?
Answer. Compact disc players
• Value of output: $300
• Value of input: Labor + Materials + Overhead
Output
Input
$300
=
$30 + $70 + $50
= 2.00

Productivity =

• 10% productivity improvement → 2.00 × 1.10 = 2.200
• Given that Productivity = 2.20, and the value of ouput is $300, we can solve for the cost of inputs: $300
Output
=
= 2.20
Input
Input
$300
= $136.36 or $136
Input =
2.20

Productivity =

• The cost of inputs must decrease by $150 − $136 = $14.
a. A $14 reduction in material costs is $14/$70 = 20.00%
b. A $14 reduction in material costs is $14/$30 = 46.67%
c. A $14 reduction in material costs is $14/$50 = 28.00%