# Operations Management Chapter 1

November 16, 2017 Management

Operations management Week 1 Chapter 1:  Competing with Operations Page 27, question 2:  Suds and Duds Laundry A. Week| Hours(input)| Shirts(output)| Ratio| 1| 24| 68| 2. 83 Shirts/hour| 2| 46| 130| 2. 83 Shirts/hour| 3| 62| 152| 2. 45 Shirts/hour| 4| 51| 125| 2. 45 Shirts/hour| 5| 45| 131| 2. 91 Shirts/hour| B. The output difference isn’t large between the input and output ratio. It seems as if producitivity may decline if there were more people working. If Suds and Dud has more than 2 or 3 workers on the amount of work per employee will decrease and there will be more room to be less productive.

The laundry company may also not be able to handle the amount of business and have an overflow of work and not enough resources to handle. Page 28, question 3:  CD Player Production The value of output is \$300 Value of Input: Labor + Materials + Over head Productivity = Output/Input = \$300/ \$30+ \$70 +\$50 = 2. 0 10% of productivity is 2. 0 * 1. 1 = 2. 2 To find the Input I had to solve for x. Productivity = Output/input= \$300/X=2. 2 Input = \$136 The cost of inputs = \$150-136 = \$14 A. \$14 reduction in material costs = \$14/\$70 = 20. % B. \$14 reduction in labor costs= \$14/\$30 = 46. 7% C. \$14 reduction in overhead is \$14/ \$50 = 28. 0% Page 28, question 5:  Alyssa’s Custom Cakes A. 5 Birthday cakes @ \$50 a cake = \$250 2 Wedding cakes @150 a cake = \$300 3 Specialty cakes @\$100 a cake= \$300 Alyssa’s has a monthly revenue of \$850. We are given the Multifactor productivity ratio of 1. 25. 1. 25=\$850/X = \$680. This is the total cost for the 10 cakes. The average cost a cake is \$68 a cake. B. Labor Productivity Birthday= \$50/1. 5 hours = \$33. 3 a hour

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Wedding= \$150/4 hours = \$37. 50 a hour Specialty= \$100/ 1 hours = \$100 a hour c. The labor productivity shows that the specialty cakes are the cakes Alyssa should sell the most. \$100 in an hour worth of time shows the best profits compared to wedding and birthday cakes. D. In my opinion making birthday cakes are the least profitable for Alyssa. Supplement A:  Decision Making Page 47, question 1:  Williams Products A. Break-even quantity Quantity= Fixed Costs/(unit price-unit variable costs) =\$60,000/(\$18-\$6) =5,000 units

Page 49, question 13:  New Product Analysis A. Let X= allocation to criteria 2 and 3 4x=allocation to criterion 1 4x= allocation to criterion 4 4x+x+x+4X= 100 points 10x=100 points X=10 points Product| Calculation| Total| 1| 40(8)+10(3)+10(9)+40(7)| 720| 2| 40(7)+10(8)+10(5)+40(7)| 650| 3| 40(3)+10(4)+10(7)+40(9)| 590| 4| 40(6)+10(7)+10(6)+40(2)| 450| 5| 40(9)+10(7)+10(5)+40(7)| 760| B. Threshold is . 7[10(40+10+10+40)] = 700 C. Product 1 and product 5 have a score greater than 700, they are the products that should be considered.

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