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    Exercise (Productivity)

    Uploaded by

    imran_chaudhry
    This document provides solutions to productivity practice problems. Problem 1 involves calculating total factor productivity, multi-factor productivity, and partial productivity ratios for a company that produced 1,050,000 total output using 650,000 total inputs and 450,000 labor and material inputs. Problem 2 calculates the labor productivity for two types of cars produced in terms of units per labor hour and as an unitless ratio, noting issues with only using units per hour. Problem 3 involves calculating and comparing labor and multi-factor productivity under various scenarios that change production levels, labor hours, wages, and material costs.

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    Exercise (Productivity)

    Uploaded by

    imran_chaudhry
    974 views3 pages
    This document provides solutions to productivity practice problems. Problem 1 involves calculating total factor productivity, multi-factor productivity, and partial productivity ratios for a company that produced 1,050,000 total output using 650,000 total inputs and 450,000 labor and material inputs. Problem 2 calculates the labor productivity for two types of cars produced in terms of units per labor hour and as an unitless ratio, noting issues with only using units per hour. Problem 3 involves calculating and comparing labor and multi-factor productivity under various scenarios that change production levels, labor hours, wages, and material costs.

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    Exercise(Productivity)

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    This document provides solutions to productivity practice problems. Problem 1 involves calculating total factor productivity, multi-factor productivity, and partial productivity ratios for a company that produced 1,050,000 total output using 650,000 total inputs and 450,000 labor and material inputs. Problem 2 calculates the labor productivity for two types of cars produced in terms of units per labor hour and as an unitless ratio, noting issues with only using units per hour. Problem 3 involves calculating and comparing labor and multi-factor productivity under various scenarios that change production levels, labor hours, wages, and material costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    974 views3 pages

    Exercise (Productivity)

    Uploaded by

    imran_chaudhry
    This document provides solutions to productivity practice problems. Problem 1 involves calculating total factor productivity, multi-factor productivity, and partial productivity ratios for a company that produced 1,050,000 total output using 650,000 total inputs and 450,000 labor and material inputs. Problem 2 calculates the labor productivity for two types of cars produced in terms of units per labor hour and as an unitless ratio, noting issues with only using units per hour. Problem 3 involves calculating and comparing labor and multi-factor productivity under various scenarios that change production levels, labor hours, wages, and material costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    OPERATIONS MANAGEMENT (MGCR-472-061)

    Productivity Practice Problems


    1. The South Dakota Clay Pigeon Corporation showed the following results for last
    year:

    (A) What was the total factor productivity?


    (B) What was the multi-factor productivity measure for total output to labor and
    materials?
    (C) What was the multi-factor productivity measure for finished output to labor
    and materials?
    (D) What was the partial productivity measure for total output to energy?
    (E) What was the partial productivity ratio for finished units to energy?

    2. Two types of cars (Deluxe and Limited) were produced by a car manufacturer in
    2001. Quantities sold, price per unit and labor hours follow. What is the labor
    productivity for each car? Explain the problem(s) associated with labor
    productivity.
    Quantity $ per unit
    Deluxe Car 4,000 units sold $8,000 per car
    Limited Car 6,000 units sold $9,500 per car
    Labor Deluxe 20,000 hours $12 per hour
    Labor Limited 30,000 hours $14 per hour

    3. 10,000 units produced, sold for $10/unit, 500 labor hours, labor rate: $9/hr, cost of
    raw material: $5,000, cost of purchased material: $25,000.

    1
    a. What is the labor productivity in units per hour and in unitless figure?
    b. What will be the labor productivity if 12,000 units are produced using 500
    labor hours (in units per hour and unitless figure)?
    c. How much labor hour should we use in order to reach the productivity
    level of part (b), if the product is 10,000 units.
    d. What will be the multi-factor productivity (MFP), in unitless figure and in
    terms of units/dollar, taking into account the labor and material costs?
    e. Suppose we hire very efficient workers who can finish the job in 350
    hours. What is now the MFP with labor rate of $9/hour?
    f. However we have to pay higher wages for the more efficient workers.
    How much extra can we pay without reducing productivity from the level
    of part (d) in units/dollar?

    Solution to Productivity Exercise Problems


    1.
    (A) What was the total factor productivity?
    1,050,000/650,000 = 1.62
    (B) What was the multi-factor productivity measure for total output to labor and
    materials?
    1,050,000/450,000 = 2.33
    (C) What was the multi-factor productivity measure for finished output to labor
    and materials?
    1,000,000/450,000 = 2.22
    (D) What was the partial productivity measure for total output to energy?
    1,050,000/25,000 = 42
    (E) What was the partial productivity ratio for finished units to energy?
    1,000,000/25,000 = 40

    2
    2. Deluxe = (4,000 units*$8,000/car)/(20,000 labor hour*$12/hour) = 133.33 (unitless);
    limited = (6,000 units *$9,500/car)/(30,000 labor hour*$14/hour) = 135.71 (unitless)

    Deluxe = (4,000 units/car)/(20,000 labor hour) = 0.2 unit/hour;


    limited = 6,000 units/30,000 labor hour = 0.2 unit/hour
    Labor productivity in terms of units/hour does not take into account the quality of the
    product (i.e., does not take into account the selling prices) and does not take into
    account the skill level of the workers (i.e. does not take into account the labor rate).
    Labor productivity in unitless terms might be difficult for department managers to
    comprehend who has a better idea about what units/hour mean. Unitlesss is mostly
    used by high-level managers while units/hour is used by departmental managers.

    3. a. Labor productivity = 10,000 units/500 labor hour = 20 units/hour;


    Labor productivity = (10,000 units*$10/unit)/(500 labor hour*$9/hour) = 22.22
    (unitless)
    b. Labor productivity = 12,000 units/500 labor hour = 24 units/hour;
    Labor productivity = (12,000 units*$10/unit)/(500 labor hour*$9/hour) = 26.67
    (unitless)
    10,000units
    c. = 24 units/hour ⇒ 24 X = 10,000 ⇒ X = 416.7 ≈ 417 hours
    X
    d. MFP = 10,000 units/$(500*9 + 5,000 + 25,000) = 0.29 units/dollar;
    MFP = (10,000*$10/unit)/$(500*9 + 5,000 + 25,000) = 2.9
    e. MFP = 10,000 units/$(350*9 + 5,000 + 25,000) = 0.3 units/dollar;
    f. MFP = (10,000 unit)/$(350*X + 5,000 + 25,000) = 0.29
    10,000
    = 0.29 ⇒ 10,000 = 0.29(350 X + 5000 + 25,000)
    (350 X + 5,000 + 25,000)
    ⇒ 10,000 − 8700 = 101.5 X ⇒ X = 12.81
    At maximum, we can pay $12.81/hour.)

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