## Saturday, 23 November 2013

### A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 45 minutes is needed to do a title search. The researcher cost is \$1.8 per minute. Clients are charged a fee of \$600. Company A’s software would reduce the average search time by 8 minutes, at a cost of \$3.6 per search. Company B’s software would reduce the average search time by 9 minutes at a cost of \$5.8 per search. a. Calculate the productivity in terms of revenue per dollar of input. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "\$" sign in your response.) Approach Productivity per Dollar Input Current \$ Company A \$ Company B \$ b. Which option would have the highest productivity in terms of revenue per dollar of input? Company A rev: 03_15_2012 Explanation: Approach Average Time Cost Productivity per Dollar Input Current 45 45 × \$1.8 = \$81.00 \$600/\$81.00 = \$7.41 Company A 37 37 × \$1.8 + \$3.6 = \$70.20 \$600/\$70.20 = \$8.55 Company B 36 36 × \$1.8 + \$5.8 = \$70.60 \$600/\$70.60 = \$8.50

A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 45 minutes is needed to do a title search. The researcher cost is \$1.8 per minute. Clients are charged a fee of \$600. Company A’s software would reduce the average search time by 8 minutes, at a cost of \$3.6 per search. Company B’s software would reduce the average search time by 9 minutes at a cost of \$5.8 per search.

 a. Calculate the productivity in terms of revenue per dollar of input. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "\$" sign in your response.)

 Approach Productivity per      Dollar Input Current \$ Company A \$ Company B \$

 b. Which option would have the highest productivity in terms of revenue per dollar of input? Company A

rev: 03_15_2012

Explanation:
 Approach Average Time Cost Productivity per  Dollar Input Current 45 45 × \$1.8 = \$81.00 \$600/\$81.00 = \$7.41 Company A 37 37 × \$1.8 + \$3.6 = \$70.20 \$600/\$70.20 = \$8.55 Company B 36 36 × \$1.8 + \$5.8 = \$70.60 \$600/\$70.60 = \$8.50

### The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is \$40, the overhead rate is 1.0 times labor cost, and material cost is \$6 per customer. Unit Employees Customers Processed / Day A 3 30 B 7 46 C 8 56 D 3 28 a. Compute the labor productivity and the multifactor productivity for each unit. Use an eight-hour day for multifactor productivity. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.) Unit Labor Productivity Multifactor Productivity A B C D b. Suppose a new, more standardized procedure is to be introduced that will enable each employee to process one additional customer per day. Compute the expected labor and multifactor productivity rates for each unit. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 4 decimal places.) Unit Labor Productivity Multifactor Productivity A B C D rev: 03_15_2012 Explanation: a. (1) Unit (2) Employees (3) Customers processed (4) Labor Cost @\$40 (5) Material Cost @\$6 (6) Overhead @1 (7) Total Cost (8) LP (3) ÷ (2) (9) MFP (3) ÷ (7) A 3 30 960 180 960 2,100 10.0 0.014 B 7 46 2,240 276 2,240 4,756 6.6 0.010 C 8 56 2,560 336 2,560 5,456 7.0 0.010 D 3 28 960 168 960 2,088 9.3 0.013 b. (1) Unit (2) Employees (3) Customers processed (4) Labor Cost @\$40 (5) Material Cost @\$6 (6) Overhead @1 (7) Total Cost (8) LP (3) ÷ (2) (9) MFP (3) ÷ (7) A 3 33 960 198 960 2,118 11.0 0.0156 B 7 53 2,240 318 2,240 4,798 7.6 0.0110 C 8 64 2,560 384 2,560 5,504 8.0 0.0116 D 3 31 960 186 960 2,106 10.3 0.0147

The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is \$40, the overhead rate is 1.0 times labor cost, and material cost is \$6 per customer.

 Unit Employees Customers Processed / Day A 3 30 B 7 46 C 8 56 D 3 28

 a. Compute the labor productivity and the multifactor productivity for each unit. Use an eight-hour day for multifactor productivity. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 3 decimal places.)

 Unit Labor        Productivity Multifactor         Productivity A B C D

 b. Suppose a new, more standardized procedure is to be introduced that will enable each employee to process one additional customer per day. Compute the expected labor and multifactor productivity rates for each unit. (Round your "Labor Productivity" answers to 1 decimal place and "Multifactor Productivity" answers to 4 decimal places.)

 Unit Labor        Productivity Multifactor             Productivity A B C D

rev: 03_15_2012

Explanation:

### An operation has a 15 percent scrap rate. As a result, 79 pieces per hour are produced. What is the potential increase in labor productivity that could be achieved by eliminating the scrap? (Round your intermediate calculations to 3 decimal places and final answer to 1 decimal place. Omit the "%" sign in your response.) This would amount to an increase of % rev: 03_15_2012 Explanation: Without scrap the output can be 92.941 pieces per hour 79 = 92.941 pieces per hour 1 − .15 (92.941 pieces per hour) × (100% – 15%) = 79 pieces per hour. The increase in productivity would be 92.941 – 79 = 13.941 pieces per hour. This would amount to an increase of (13.941 / 79) = 17.6%.

An operation has a 15 percent scrap rate. As a result, 79 pieces per hour are produced. What is the potential increase in labor productivity that could be achieved by eliminating the scrap? (Round your intermediate calculations to 3 decimal places and final answer to 1 decimal place. Omit the "%" sign in your response.)

 This would amount to an increase of %

rev: 03_15_2012

Explanation:
 Without scrap the output can be 92.941 pieces per hour

 79 = 92.941 pieces per hour 1 − .15

 (92.941 pieces per hour) × (100% – 15%) = 79 pieces per hour. The increase in productivity would be 92.941 – 79 = 13.941 pieces per hour. This would amount to an increase of (13.941 / 79) = 17.6%.

### A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who produced an average of 100 carts per hour. Workers receive \$13 per hour, and machine cost was \$40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by \$11 per hour while output increased by 5 carts per hour. a. Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity. (Round your answers to 2 decimal places.) Before carts per worker per hour After carts per worker per hour b. Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure. (Round your answers to 2 decimal places.) Before carts/\$1 After carts/\$1 c. Comment on the changes in productivity according to the two measures. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" signs in your response.) Labor productivity increased by % Multifactor productivity increased by % rev: 03_15_2012 Explanation: a. Before: 100 ÷ 5 = 20.00 carts per worker per hour. After: 105 ÷ 4 = 26.25 carts per worker per hour. b. Before: \$13 x 5 = \$65 + \$40 = \$105; hence 100 ÷ \$105 = 0.95 carts/\$1. After: \$13 x 4 = \$52 + \$51 = \$103; hence 105 ÷ \$103 = 1.02 carts/\$1. c. Labor productivity increased by 31.25% (6.25/20.00). Multifactor productivity increased by 7.37% (.07/.95).

A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who produced an average of 100 carts per hour. Workers receive \$13 per hour, and machine cost was \$40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by \$11 per hour while output increased by 5 carts per hour.

 a. Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity. (Round your answers to 2 decimal places.)

 Before carts per worker per hour After carts per worker per hour

 b. Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure. (Round your answers to 2 decimal places.)

 Before carts/\$1 After carts/\$1

 c. Comment on the changes in productivity according to the two measures. (Round your intermediate calculations and final answers to 2 decimal places. Omit the  "%" signs in your response.)

 Labor productivity increased by % Multifactor productivity increased by  %

rev: 03_15_2012

Explanation: a.
 Before: 100 ÷ 5 = 20.00 carts per worker per hour. After: 105 ÷ 4 = 26.25 carts per worker per hour.

b.
 Before: \$13 x 5 = \$65 + \$40 = \$105; hence 100 ÷ \$105 = 0.95 carts/\$1. After: \$13 x 4 = \$52 + \$51 = \$103; hence 105 ÷ \$103 = 1.02 carts/\$1.

c.
 Labor productivity increased by 31.25% (6.25/20.00). Multifactor productivity increased by 7.37% (.07/.95).

### Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of \$18. Overhead is 1.5 times weekly labor cost. Material cost is \$6 per pound. (Round your answers to 2 decimal places.) Week Output (units) Workers Material (lbs) 1 29,000 5 470 2 32,000 7 460 3 33,000 7 510 4 36,000 8 520 Week MFP 1 2 3 4 rev: 03_15_2012 Explanation: 1 2 3 4 5 6 7 Week Output Worker Cost @ \$18×40 Overhead Cost @1.5 Material Cost@\$6 Total Cost MFP (2) ÷ (6) 1 29,000 3,600 5,400 2,820 11,820 2.45 2 32,000 5,040 7,560 2,760 15,360 2.08 3 33,000 5,040 7,560 3,060 15,660 2.11 4 36,000 5,760 8,640 3,120 17,520 2.05

Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of \$18. Overhead is 1.5 times weekly labor cost. Material cost is \$6 per pound. (Round your answers to 2 decimal places.)

 Week Output (units) Workers Material (lbs) 1 29,000 5 470 2 32,000 7 460 3 33,000 7 510 4 36,000 8 520

 Week MFP 1 2 3 4

rev: 03_15_2012

Explanation:

### The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks, obtaining these figures: Week Crew Size Yards Installed 1 4 97 2 3 69 3 4 97 4 2 54 5 3 66 6 2 50 a. Compute the labor productivity for each of the weeks. (Round your answers to 2 decimal places.) Week Crew size Labour productivity (Yards) 1 4 2 3 3 4 4 2 5 3 6 2 b. On the basis of your calculations, what can you conclude about crew size and productivity? Possibly even sized crews are better than odd sizes and a crew of 2 seems to work best.

The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks, obtaining these figures:

 Week Crew Size Yards Installed 1 4 97 2 3 69 3 4 97 4 2 54 5 3 66 6 2 50

 a. Compute the labor productivity for each of the weeks. (Round your answers to 2 decimal places.)

 Week Crew size Labour productivity    (Yards) 1 4 2 3 3 4 4 2 5 3 6 2

 b. On the basis of your calculations, what can you conclude about crew size and productivity?

 Possibly even  sized crews are better than odd  sizes and a crew of  2  seems to work best.

### A catering company prepared and served 345 meals at an anniversary celebration last week using nine workers. The week before, seven workers prepared and served 240 meals at a wedding reception. a1. Calculate the labor productivity for each event. (Round your answers to 1 decimal place.) Anniversary meals/worker Wedding meals/worker a2. For which event was the labor productivity higher? Anniversary rev: 03_15_2012 Explanation: Anniversary = 345 / 9 = 38.3 meals/worker Wedding = 240 / 7 = 34.3 meals/worker

A catering company prepared and served 345 meals at an anniversary celebration last week using nine workers. The week before, seven workers prepared and served 240 meals at a wedding reception.

 a1. Calculate the labor productivity for each event. (Round your answers to 1 decimal place.)

 Anniversary meals/worker Wedding meals/worker

 a2. For which event was the labor productivity higher? Anniversary

rev: 03_15_2012

Explanation:
 Anniversary = 345 / 9 = 38.3 meals/worker Wedding = 240 / 7 = 34.3 meals/worker

### A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for \$530 and B for \$521. In addition, A offers a three-day rate of \$466 and a nine-day rate of \$417, and B offers a four-day rate of \$459 and a seven-day rate of \$432. Annual holding costs are 37 percent of unit price. Three hundred and twenty boxes are to be shipped, and each box has a price of \$154. Which

A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for \$530 and B for \$521. In addition, A offers a three-day rate of \$466 and a nine-day rate of \$417, and B offers a four-day rate of \$459 and a seven-day rate of \$432. Annual holding costs are 37 percent of unit price. Three hundred and twenty boxes are to be shipped, and each box has a price of \$154. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "\$" sign in your response.)

 A B Option Cost Option Cost 2 days \$ 2 days \$ 3 days \$ 4 days \$ 9 days \$ 7 days \$

 Ship three-day using A

rev: 03_05_2012

rev: 03_20_2012

Explanation:
 H = .37 (320 boxes) (\$154 per box) (1/365 days) = \$49.955

 Cost = FC + dH

 A B Option Cost Option Cost 2 days \$629.91 2 days \$620.91 3 days \$615.87 4 days \$658.82 9 days \$866.60 7 days \$781.69

Ship three-day using A.

### A manager at Strateline Manufacturing must choose between two shipping alternatives: two-day freight and five-day freight. Using five-day freight would cost \$145 less than using two-day freight. The primary consideration is holding cost, which is \$10 per unit a year. 2,860 items are to be shipped. Which alternative would you recommend? (Round your intermediate calculations to 2 decimal places.) Two-day freight correct

A manager at Strateline Manufacturing must choose between two shipping alternatives: two-day freight and five-day freight. Using five-day freight would cost \$145 less than using two-day freight. The primary consideration is holding cost, which is \$10 per unit a year. 2,860 items are to be shipped.

 Which alternative would you recommend? (Round your intermediate calculations to 2 decimal places.)

 Two-day freight

Explanation:
 H = \$10 per item per year (2,860 item) = \$28,600 per year.

 d = 3 days

 Incremental holding cost = \$28,600 (3/365) = \$235.07

 This exceeds the savings that would result by using five-day freight. Therefore, use two-day freight.