CHAPTER 1: OPERATIONS AND PRODUCTIVITY

TRUE/FALSE
1. Some of the operations-related activities of Hard Rock Caf include designing meals and analyzing them for ingredient cost and labor re uirements. True (Global company profile, easy) "he production process at Hard Rock Caf is limited to meal preparation and serving customers. False (Global company profile, easy) $ll organizations% including service firms such as banks and hospitals% have a production function. True (What is operations management? moderate) 'perations management is the set of activities that create value in the form of goods and services by transforming inputs into outputs. True (What is operations management? easy) $n e)ample of a *hidden* production function is money transfers at banks. True (What is operations management? moderate) 'ne reason to study operations management is to learn ho, people organize themselves for productive enterprise. True (Why study OM, easy) "he operations manager performs the management activities of planning% organizing% staffing% leading% and controlling of the '. function. True (What operations managers do, easy) *Ho, much inventory of this item should ,e have0* is ,ithin the critical decision area of uality management. False (What operations managers do, easy) 2n order to have a career in operations management% one must have a degree in statistics or uantitative methods. False (What operations managers do, easy) Henry 4ord is kno,n as the 4ather of Scientific .anagement. False (The heritage of operations management, easy) She,hart5s contributions to operations management came during the Scientific .anagement 6ra. False (The heritage of operations management, easy) Students ,anting to pursue a career in operations management ,ill find multidisciplinary kno,ledge beneficial. True (Where are the OM jobs? easy)

!. #. &.

(. +.

-.

/.

1.

13. 11. 1!.

1#. 1&. 1(. 1+.

Customer interaction is often high for manufacturing processes% but lo, for services. False (Operations in the ser ice sector, moderate) 7roductivity is more difficult to improve in the service sector. True (The producti ity challenge, moderate) .anufacturing no, constitutes the largest economic sector in postindustrial societies. False (Operations in the ser ice sector, moderate) 2n the past half-century% the number of people employed in manufacturing has risen only modestly% but each manufacturing employee is manufacturing about !3 times as much. True (Operations in the ser ice sector, easy) $ kno,ledge society is one that has migrated from ,ork based on kno,ledge to one based on manual ,ork. False (The producti ity challenge, easy) 7roductivity is the total value of all inputs to the transformation process divided by the total value of the outputs produced. False (The producti ity challenge, easy) .easuring the impact of a capital ac uisition on productivity is an e)ample of multi-factor productivity. False (The producti ity challenge, moderate) 6thical and social dilemmas arise because stakeholders of a business have conflicting perspectives. True (!thics and social responsibility, easy)

1-.

1/.

11.

!3.

MULTIPLE CHOICE
!1. $t Hard Rock Caf% tasks that reflect operations or operations management include a. designing meals b. testing meals 8recipes9 c. analyzing meals for the cost of ingredients d. preparing employee schedules e. all of the above e (Global company profile, easy) $n operations task performed at Hard Rock Caf is a. borro,ing funds to build a ne, restaurant b. advertising changes in the restaurant menu c. calculating restaurant profit and loss d. preparing employee schedules e. all of the above d (Global company profile, moderate)

!!.

!#.

'perations management is applicable a. mostly to the service sector b. to services e)clusively c. mostly to the manufacturing sector d. to all firms% ,hether manufacturing and service e. to the manufacturing sector e)clusively d (What is operations management? moderate) :hich of the follo,ing are the primary functions of all organizations0 a. operations% marketing% and human resources b. marketing% human resources% and finance;accounting c. sales% uality control% and operations d. marketing% operations% and finance;accounting e. research and development% finance;accounting% and purchasing d (Organi"ing to produce goods and ser ices, moderate) <udgeting% paying the bills% and collection of funds are activities associated ,ith the a. management function b. control function c. finance;accounting function d. production;operations function e. staffing function c (Organi"ing to produce goods and ser ices, moderate) :hich of the follo,ing ,ould not be an operations function in a fast-food restaurant0 a. advertising and promotion b. designing the layout of the facility c. maintaining e uipment d. making hamburgers and fries e. purchasing ingredients a (Organi"ing to produce goods and ser ices, moderate) "he marketing function=s main concern is ,ith a. producing goods or providing services b. procuring materials% supplies% and e uipment c. building and maintaining a positive image d. generating the demand for the organization=s products or services e. securing monetary resources d (Organi"ing to produce goods and ser ices, moderate) Reasons to study 'perations .anagement include a. studying ,hy people organize themselves for free enterprise b. kno,ing ho, goods and services are consumed c. understanding ,hat human resource managers do d. learning about a costly part of the enterprise e. all of the above d (Why study OM? moderate)

!&.

!(.

!+.

!-.

!/.

!1.

Reasons to study 'perations .anagement include learning about a. ,hy people organize themselves for productive enterprise b. ho, goods and services are produced c. ,hat operations managers do d. a costly part of the enterprise e. all of the above e (Why study OM? easy) "he five elements in the management process are a. plan% direct% update% lead% and supervise b. accounting;finance% marketing% operations% and management c. organize% plan% control% staff% and manage d. plan% organize% staff% lead% and control e. plan% lead% organize% manage% and control c (What do operations managers do? easy) "he responsibilities of the operations manager include a. planning% organizing% staffing% procuring% and revie,ing b. forecasting% designing% planning% organizing% and controlling c. forecasting% designing% operating% procuring% and revie,ing d. planning% organizing% staffing% leading% and controlling e. designing and operating d (What do operations managers do? easy) :hich of the follo,ing is not an element of the management process0 a. controlling b. leading c. planning d. pricing e. staffing d (What do operations managers do? easy) $n operations manager is not likely to be involved in a. the design of products and services to satisfy customers= ,ants and needs b. the uality of products and services to satisfy customers= ,ants and needs c. the identification of customers= ,ants and needs d. ,ork scheduling to meet the due dates promised to customers e. forecasting sales c (What do operations managers do? easy) $ll of the follo,ing decisions fall ,ithin the scope of operations management e#cept for a. financial analysis b. design of products and processes c. location of facilities d. uality management e. $ll of the above fall ,ithin the scope of operations management. a (What do operations managers do? easy)

#3.

#1.

#!.

##.

#&.

#(.

"he "en Critical >ecisions of 'perations .anagement include a. ?ayout design b. .aintenance c. 7rocess and capacity design d. @uality management e. all of the above e (Why study OM? easy) :hich of the follo,ing is not one of "he "en Critical >ecisions of 'perations .anagement0 a. ?ayout design b. .aintenance c. 7rocess and capacity design d. .ass customization e. Supply chain management d (Why study OM? moderate) "he "en Critical >ecisions of 'perations .anagement include a. 4inance;accounting b. Hiring c. 7rocess and capacity design d. 7ricing e. all of the above c (Why study OM? moderate) :alter She,hart is listed among the important people of operations management because of his contributions to a. assembly line production b. measuring the productivity in the service sector c. Aust-in-time inventory methods d. statistical uality control e. all of the above d (The heritage of operations management, moderate) :alter She,hart% in the BBBBB% provided the foundations for BBBBBB in operations management. a. 11!3sC statistical sampling b. Dnited EingdomC mass production c. D.S. $rmyC logistics d. nineteenth centuryC interchangeable parts e. none of the above a ( The heritage of operations management, moderate) 6li :hitney% in the BBBBB% provided the foundations for BBBBBB in operations management. a. 11!3sC statistical sampling b. Dnited EingdomC mass production c. D.S. $rmyC logistics d. nineteenth centuryC interchangeable parts e. none of the above d (The heritage of operations management, moderate)

#+.

#-.

#/.

#1.

&3.

&1.

"he person most responsible for popularizing interchangeable parts in manufacturing ,as a. 4rederick :inslo, "aylor b. Henry 4ord c. 6li :hitney d. :hitney Houston e. ?illian Filbreth c (The heritage of operations management, moderate) "he *4ather of Scientific .anagement* is a. Henry 4ord b. 4rederick :. "aylor c. :. 6d,ards >eming d. 4rank Filbreth e. Aust a figure of speech% not a reference to a person b (The heritage of operations management, easy) Henry 4ord is noted for his contributions to a. standardization of parts b. statistical uality control c. assembly line operations d. scientific management e. time and motion studies c (The heritage of operations management, easy) :ho among the follo,ing is associated ,ith contributions to uality control in operations management0 a. Charles <abbage b. Henry 4ord c. 4rank Filbreth d. :. 6d,ards >eming e. Henri 4ayol d (The heritage of operations management, moderate) "he field of operations management is shaped by advances in ,hich of the follo,ing fields0 a. chemistry and physics b. industrial engineering and management science c. biology and anatomy d. information sciences e. all of the above e (The heritage of operations management, moderate) :hich of the follo,ing statements is true0 a. $lmost all services and almost all goods are a mi)ture of a service and a tangible product. b. $ pure good has no tangible product component. c. $ pure ser ice has only a tangible product component. d. "here is no such thing as a pure good. e. Gone of the above is a true statement. a (Operations in the ser ice sector, difficult)

&!.

&#.

&&.

&(.

&+.

&-.

:hich of the follo,ing statements is true0 a. "he person most responsible for initiating use of interchangeable parts in manufacturing ,as 6li :hitney. b. "he origins of management by e)ception are generally credited to 4rederick :. "aylor. c. "he person most responsible for initiating use of interchangeable parts in manufacturing ,as :alter She,hart. d. "he origins of the scientific management movement are generally credited to Henry 4ord. e. "he person most responsible for initiating use of interchangeable parts in manufacturing ,as Henry 4ord. a (The heritage of operations management, moderate) "he service industry makes up appro)imately ,hat percentage of all Aobs in the Dnited States0 a. 1#H b. &3H c. ++H d. --H e. 13H d (Operations in the ser ice sector, moderate) "ypical differences bet,een goods and services do not include a. cost per unit b. ability to inventory items c. timing of production and consumption d. customer interaction e. kno,ledge content a (Operations in the ser ice sector, moderate) :hich is not true regarding differences bet,een goods and services0 a. Services are generally produced and consumed simultaneouslyC tangible goods are not. b. Services tend to be more kno,ledge-based than products. c. Services tend to have a more inconsistent product definition than goods. d. Foods tend to have higher customer interaction than services. e. Gone of the above is true. d (Operations in the ser ice sector, moderate) :hich of the follo,ing is not a typical attribute of goods0 a. output can be inventoried b. often easy to automate c. aspects of uality difficult to measure d. output can be resold e. production and consumption are separate c (Operations in the ser ice sector, moderate)

&/.

&1.

(3.

(1.

(!.

:hich of the follo,ing services is least li$ely to be uni ue% i.e.% customized to a particular individual=s needs0 a. dental care b. hairdressing c. legal services d. elementary education e. computer consulting d (Operations in the ser ice sector, moderate) :hich of the follo,ing is not a typical service attribute0 a. intangible product b. easy to store c. customer interaction is high d. simultaneous production and consumption e. difficult to resell b (Operations in the ser ice sector, moderate) :hich of the follo,ing statements concerning gro,th of services is true0 a. Services no, constitute the largest economic sector in postindustrial societies. b. "he number of people employed in manufacturing has increased modestly since 11(3. c. 6ach manufacturing employee no, produces about !3 times more than in 11(3 d. $ll of the above are true. e. Gone of the above is true. d (Operations in the ser ice sector, moderate) Current trends in operations management include all of the follo,ing e#cept a. Aust-in-time performance b. rapid product development c. mass customization d. empo,ered employees e. $ll of the above are current trends. e (!#citing ne% trends in operations management, moderate) :hich of the follo,ing is not a current trend in operations management0 a. Aust-in-time performance b. global focus c. supply chain partnering d. mass customization e. $ll of the above are current trends. e (!#citing ne% trends in operations management, moderate) 'ne ne, trend in operations management is a. global focus b. mass customization c. empo,ered employees d. rapid product development e. $ll of the above are ne, trends in operations management. e (!#citing ne% trends in operations management, moderate)

(#.

(&.

((.

(+.

(-.

(/.

:hich of the follo,ing statements about trends in operations management is false0 a. Iob specialization is giving ,ay to empo,ered employees. b. ?ocal or national focus is giving ,ay to global focus. c. 6nvironmentally-sensitive production is giving ,ay to lo,-cost focus. d. Rapid product development is partly the result of shorter product cycles. e. $ll of the above statements are true. c (!#citing ne% trends in operations management, moderate) $ foundry produces circular utility access hatches 8manhole covers9. 2f 1!3 covers are produced in a 13-hour shift% the productivity of the line is a. 1.! covers;hr b. ! covers;hr c. 1! covers;hr d. 1!33 covers;hr e. none of the above c (The producti ity challenge, easy) $ foundry produces circular utility access hatches 8manhole covers9. Currently% 1!3 covers are produced in a 13-hour shift. 2f labor productivity can be increased by !3H% it ,ould then be a. 1&.& covers;hr b. !& covers;hr c. !&3 valves;hr d. 1!33 covers;hr e. none of the above a (The producti ity challenge, moderate) Fibson Jalves produces cast bronze valves on an assembly line. 2f 1+33 valves are produced in an /-hour shift% the productivity of the line is a. ! valves;hr b. &3 valves;hr c. /3 valves;hr d. !33 valves;hr e. 1+33 valves;hr d (The producti ity challenge, easy) Fibson Jalves produces cast bronze valves on an assembly line% currently producing 1+33 valves each /-hour shift. 2f the productivity is increased by 13H% it ,ould then be a. 1/3 valves;hr b. !33 valves;hr c. !!3 valves;hr d. //3 valves;hr e. 1-+3 valves;hr c (The producti ity challenge, moderate)

(1.

+3.

+1.

+!.

+#.

Fibson Jalves produces cast bronze valves on an assembly line% currently producing 1+33 valves per shift. 2f the production is increased to !333 valves per shift% labor productivity ,ill increase by a. 13H b. !3H c. !(H d. &3H e. (3H c (The producti ity challenge, moderate) "he >ulac <o) plant produces (33 cypress packing bo)es in t,o 13-hour shifts. :hat is the productivity of the plant0 a. !( bo)es;hr b. (3 bo)es;hr c. (333 bo)es;hr d. none of the above e. not enough data to determine productivity a (The producti ity challenge, moderate) "he >ulac <o) plant produces (33 cypress packing bo)es in t,o /-hour shifts. "he use of ne, technology has enabled them to increase productivity by #3H. 7roductivity is no, appro)imately a. #!.( bo)es;hr b. &3.+ bo)es;hr c. +!.( bo)es;hr d. /1.!( bo)es;hr e. #33 bo)es;hr b (The producti ity challenge, moderate) "he >ulac <o) plant produces (33 cypress packing bo)es in t,o 13-hour shifts. >ue to higher demand% they have decided to operate three /-hour shifts instead. "hey are no, able to produce +33 bo)es per day. :hat has happened to production0 a. 2t has increased by (3 sets;shift. b. 2t has increased by #-.( sets;hr. c. 2t has increased by !3H. d. 2t has decreased by /.#H. e. 2t has decreased by 1.1H. c (The producti ity challenge, moderate) 7roductivity measurement is complicated by a. the competition=s output b. the fact that precise units of measure are often unavailable c. stable uality d. the ,orkforce size e. the type of e uipment used b (The producti ity challenge, moderate)

+&.

+(.

++.

+-.

10

+/.

"he total of all outputs produced by the transformation process divided by the total of the inputs is a. utilization b. greater in manufacturing than in services c. defined only for manufacturing firms d. multi-factor productivity e. none of the above d (The producti ity challenge, moderate) :hich of the follo,ing inputs has the greatest potential to increase productivity0 a. labor b. globalization c. management d. capital e. none of the above c (The producti ity challenge, moderate) 7roductivity can be improved by a. increasing inputs ,hile holding outputs steady b. decreasing outputs ,hile holding inputs steady c. increasing inputs and outputs in the same proportion d. decreasing inputs ,hile holding outputs steady e. none of the above d (The producti ity challenge, moderate) "he largest contributor to productivity increases is BBBBBBBB% estimated to be responsible for BBBBB of the annual increase. a. managementC over one-half b. .r. >emingC one-half c. laborC t,o-thirds d. capitalC 13H e. technologyC over one-half a (The producti ity challenge, moderate) "he factor responsible for the largest portion of productivity increase in the D.S. is a. labor b. management c. capital d. all three combinedC it is impossible to determine the contribution of individual factors e. none of theseC most productivity increases come from investment spending b (The producti ity challenge, moderate) :hich of the follo,ing is not true ,hen e)plaining ,hy productivity tends to be lo,er in the service sector than in the manufacturing sector0 a. Services are typically labor intensive. b. Services are often difficult to evaluate for uality. c. Services are often an intellectual task performed by professionals. d. Services are difficult to automate. e. Service operations are typically capital intensive. e (The producti ity challenge, moderate)

+1.

-3.

-1.

-!.

-#.

11

-&.

"hree commonly used productivity variables are a. uality% e)ternal elements% and precise units of measure b. labor% capital% and management c. technology% ra, materials% and labor d. education% diet% and social overhead e. uality% efficiency% and lo, cost b (The producti ity challenge, moderate) "he service sector has lo,er productivity improvements than the manufacturing sector because a. the service sector uses less skilled labor than manufacturing b. the uality of output is lo,er in services than manufacturing c. services usually are labor intensive d. service sector productivity is hard to measure e. none of the above c (The producti ity challenge, moderate) 7roductivity tends to be more difficult to improve in the service sector because the ,ork is a. often difficult to automate b. typically labor intensive c. fre uently processed individually d. often an intellectual task performed by professionals e. all of the above e (The producti ity challenge, moderate) $mong the ethical and social challenges facing operations managers are a. honoring community commitments b. maintaining a clean environment c. developing safe uality products d. providing a safe ,orkplace e. all of the above e (!thics and social responsibility, easy) $mong the ethical and social challenges facing operations managers are a. honoring financial commitments b. maintaining a clean environment c. developing lo,-cost products d. providing an efficient ,orkplace e. all of the above b (!thics and social responsibility, moderate) :hich of the follo,ing is not among the ethical and social challenges facing operations managers0 a. honoring community commitments b. maintaining a clean environment c. developing safe uality products d. increasing e)ecutive pay e. providing a safe ,orkplace d (!thics and social responsibility, easy)

-(.

-+.

--.

-/.

-1.

12

/3.

$ business5s stakeholders% ,hose conflicting perspectives cause ethical and social dilemmas% include a. lenders b. suppliers c. o,ners d. employees e. all of the above e (!thics and social responsibility, easy)

FILL-IN-THE-BLANK
/1. BBBBBBBBBBBBBBBBBBBBBBBBBBBBB is an operations task at Hard Rock Caf associated ,ith the critical decision area *?ayout design.* &esigning efficient layouts (Global company profile, moderate) BBBBBBBBBBBBBBBBBBBBBBBBBBBBB is the set of activities that transforms inputs into goods and services. Operations management (What is operations management? easy) .arketing% 7roduction% and BBBBBBBBBBBBBBBBBBBBBBBBBBBBB are the three functions that all organizations must perform to create goods and services. finance'accounting (Organi"ing to produce goods and ser ices, easy) *Should ,e make or buy this component0* is an issue in the BBBBBBBBBBBBBBBBBBBBBBBBBBBBB critical decision area. supply(chain management (What operations managers do, easy) Henry 4ord and BBBBBBBBBBBBBBBBBBBBBBBBBBBBB are credited ,ith the development of the moving assembly line. )harles *orensen (The heritage of operations management, easy) :hen a tangible product is not included in a service% it is called a BBBBBBBBBBBBBBBBBBBBBBBBBBBBB. pure ser ice (Operations in the ser ice sector, easy) BBBBBBBBBBBBBBBBBBBBBBBBBBBBB is the ability of the organization to be fle)ible enough to cater to the individual ,hims of consumers. Mass customi"ation (!#citing ne% trends in operations management, moderate) BBBBBBBBBBBBBBBBBBBBBBBBBBBBB is the operations management trend that moves more decision making to the individual ,orker. !mpo%ered employees (!#citing ne% trends in operations management, moderate) BBBBBBBBBBBBBBBBBBBBBBBBBBBB is the total of all outputs produced by the transformation process divided by the total of the inputs. Multi(factor producti ity (The producti ity challenge, easy)

/!.

/#.

/&.

/(.

/+.

/-.

//.

/1.

13

13.

7roductivity is the ratio of BBBBBBBBBBBB to BBBBBBBBB. Dsing this relationship% productivity can be improved by BBBBBBBBBBBBBBBBBBBBBB or BBBBBBBBBBBBBBBBBBBBBBBBB. inputs, outputs+ reducing inputs %hile holding outputs constant+ increasing outputs %hile holding inputs constant, (The producti ity challenge, moderate)

SHORT ANSWER
11. ?ist three or more operations-related tasks carried out by Hard Rock Caf. -ro iding custom meals+ designing, testing, and costing meals+ ac.uiring, recei ing , and storing supplies+ recruiting and training employees+ preparing employee schedules+ designing efficient restaurant layouts, (Global company profile, easy) ?ist t,o operations-related tasks carried out by Hard Rock Caf. .atch each to its area of the "en Critical >ecisions. -ro iding custom meals/ser ice and product design+ designing, testing, and costing meals/ ser ice and product design+ ac.uiring, recei ing , and storing supplies/supply(chain management+ recruiting and training employees/human resources and job design+ preparing employee schedules/intermediate and short(term scheduling+ designing efficient restaurant layouts/layout design, (Global company profile, moderate) >efine operations management. :ill your definition accommodate both manufacturing and service operations0 Operations management can be defined as the management of all activities directly related to the creation of goods and/or services through the transformation of inputs into outputs. (What is operations management? easy) ?ist the items that 4redrick :. "aylor believed management should be more responsible for. 0e belie ed that management should be more responsible for matching employees to the right job, pro iding the proper training, pro iding proper %or$ methods and tools, and establishing legitimate incenti es for %or$ to be accomplished, (The heritage of operations management, moderate) 'perations managers should be ,ell versed in ,hat disciplines in order to make good decisions0 Management science, information sciences, and often one of the biological or physical sciences, (The heritage of operations management, moderate) :hy are services typically more difficult to standardize% automate% and make efficient0 *er ices typically re.uire customer interaction, %hich ma$es it difficult to standardi"e, automate, and ma$e efficient, (Operations in the ser ice sector, moderate) Ho, do services differ from goods0 ?ist five ,ays. -ic$ from the follo%ing1 a ser ice is usually tangible+ it is often produced and consumed simultaneously+ often uni.ue+ it in ol es high customer interaction+ product definition is inconsistent+ often $no%ledge(based+ and fre.uently dispersed, (Operations in the ser ice sector, moderate)

1!.

1#.

1&.

1(.

1+.

1-.

14

1/.

Services are often kno,ledge-based. 7rovide t,o e)amples% and e)plain ,hy they are kno,ledgebased. 2ns%er %ill ary, but the te#tboo$ used education, medical, and legal ser ices, (Operations in the ser ice sector, moderate) :hy are organizations changing from batch 8large9 shipments to Aust-in-time 8I2"9 shipments0 Organi"ations are s%itching to 34T shipments because in entory re.uires a large financial in estment, and impedes the responsi eness to changes in the mar$etplace, (!#citing ne% trends in operations management, moderate)

11.

133. :hy are organizations becoming more global0 Organi"ations are becoming more global %ith the decline in the cost of communication and transportation, 2dditionally, resources((material, talent, and labor((are also becoming more global, (!#citing ne% trends in operations management) 131. ?ist the three productivity variables used in the te)t. :hat other variables are possible0 >iscuss% and provide an e)ample. The three common ariables are labor, capital, and management, The te#t also uses 5material5 and 5miscellaneous5 in its e#amples, 2ny resource could be named as a producti ity ariable, (The producti ity challenge, moderate) 13!. :hat is a kno,ledge society0 2 $no%ledge society is one in %hich much of the labor force has migrated from manual %or$ to %or$ based on $no%ledge, (The producti ity challenge, moderate) 13#. :hy are operations managers faced ,ith ethical and social challenges0 6usinesses ha e di erse sta$eholders, %hich include o%ners, employees, lenders, and distributors, These sta$eholders hold conflicting perspecti es, (!thics and social responsibility, easy) 13&. :hat are some of the ethical and social challenges faced by operations managers0 &e eloping safe .uality products+ maintaining a clean en ironment+ pro iding a safe %or$place+ honoring community commitments, (!thics and social responsibility, easy) 13(. $s the administrative manager in a la, office% you have been asked to develop a system for evaluating the productivity of the 1( la,yers in the office. :hat difficulties are you going to have in doing this% and ho, are you going to overcome them0 -roducti ity measurers for a la% office are difficult, *imple criteria, li$e number of cases processed, fail to consider comple#ity of the case, ! en counting %ins is difficult, as many cases are settled %ith some sort of compromise, !#ternal elements such as the .uality of the opposing counsel and the tenacity of the opposition also ma$e counting loo$ rather silly, )ategories of cases can help/(i,e,, uncontested di orce, no personal injury auto case, etc,) 0o%e er, many firms end up counting hours billed, This in turns leads to other problems, as noted by the number of false billing cases, (The producti ity challenge, moderate)

15

PROBLEMS
13+. Susan has a part-time *cottage industry* producing seasonal ply,ood yard ornaments for resale at local craft fairs and bazaars. She currently ,orks / hours per day to produce 1+ ornaments. a. :hat is her productivity0 b. She thinks that by redesigning the ornaments and s,itching from use of a ,ood glue to a hot-glue gun she can increase her total production to !3 ornaments per day. :hat is her ne, productivity0 c. :hat is her percentage increase in productivity0 a, 78 ornaments'9 hours : ; ornaments'hour b, ;< ornaments'9 hours : ;,= ornaments'hour c, )hange in producti ity : <,= ornaments'hour+ percent change : <,=';: ;=> (The producti ity challenge, moderate) 13-. $ firm cleans chemical tank cars in the <ay St. ?ouis area. :ith standard e uipment% the firm typically cleaned -3 chemical tank cars per month. "hey utilized 13 gallons of solvent% and t,o employees ,orked !3 days per month% / hours a day. "he company decided to s,itch to a larger cleaning machine. ?ast $pril% they cleaned +3 tank cars in only 1( days. "hey utilized 1! gallons of solvent% and the t,o employees ,orked + hours a day. 1. :hat ,as their productivity ,ith the standard e uipment0 !. :hat is their productivity ,ith the larger machine0 #. :hat is the change in productivity0 ?esource *ol ent @abor *tandard !.uipment
-3 13 -3 #!3 ==3.!!

@arger Machine
+3 1! +3 1/3 =( =.##

-ercent )hange
( .!! = !/.(-H = (3H

.## .!!

(The producti ity challenge, moderate) 13/. "he >ulac <o) plant produces ,ooden packing bo)es to be used in the local seafood industry. Current operations allo, the company to make (33 bo)es per day% in t,o /-hour shifts 8!(3 bo)es per shift9. "he company has introduced some small changes in e uipment% and conducted appropriate Aob training% so that production levels have risen to #33 bo)es per shift. "hese changes did not re uire any change in the amount of capital spending or energy use. :hat is the firm=s ne, labor productivity0 8<< bo#es per day ' 78 hours : AB,= bo#es per hour

16

131. .ark=s Ceramics spent K&333 on a ne, kiln last year% in the belief that it ,ould cut energy usage !(H over the old kiln. "his kiln is an oven that turns *green,are* into finished pottery. .ark is concerned that the ne, kiln re uires e)tra labor hours for its operation. .ark ,ants to check the energy savings of the ne, oven% and also to look over other measures of their productivity to see if the change really ,as beneficial. .ark has the follo,ing data to ,ork ,ithL ?ast Mear &333 (333 #(3 1(333 #333 "his Mear &333 (333 #-( 11333 !+33

7roduction 8finished units9 Freen,are 8pounds9 ?abor 8hrs9 Capital 8K9 6nergy 8k:h9

:ere the modifications beneficial0 The energy modifications did not generate the e#pected sa ings+ labor and capital producti ity decreased, (The producti ity challenge, moderate) ?esource @abor )apital !nergy @ast Cear D<<< D<<< D<<< ' ' ' A=< 7=<<< A<<< : 77,DA : <,;B : 7,AA This Cear D<<< D<<< D<<< ' ' ' AB= 7E<<< ;8<< : : : 7<,8B ,;7 7,=D )hange (<,B8 (<,<8 <,;7 -ct, )hange (8,B> (;;,;> 7=,D>

113. .artin .anufacturing has implemented several programs to improve its productivity. "hey have asked you to evaluate the firm=s productivity by comparing this year=s performance ,ith last year=s. "he follo,ing data are availableL ?ast Mear 13%(33 units 1!%333 K-%+33 K/#%333 "his Mear 1!%133 units 1#%!33 K/%!(3 K//%333

'utput ?abor Hours Dtilities Capital

Has .artin .anufacturing improved its productivity during the past year0 -roducti ity impro ed in all three categories this year+ utilities sho%ed the greatest increase, and labor the least, (The producti ity challenge, moderate) ?esource @abor )apital !nergy @ast Cear 7<=<< 7<=<< 7<=<< ' ' ' 7;<<< B8<< 9A<<< : <,99 : 7,A9 : <,7A This Cear 7;7<< 7;7<< 7;7<< ' ' ' 7A;<< 9;=< 99<<< : : : <,E; 7,DB <,7D )hange <,<D <,<E <,<7 -ct, )hange D,9> 8,;> 9,B>

17

111. 4elicien gro,s mirlitons 8that=s CaAun for Chayote s uash9 in his 133 by 133 foot garden. He then sells the crop at the local farmers= market. ",o summers ago% he ,as able to produce and sell 1!33 pounds of mirlitons. ?ast summer% he tried a ne, fertilizer that promised a (3H increase in yield. He harvested 1133 pounds. >id the fertilizer live up to its promise0 *ince the producti ity gain %as =9,A>, not =<>, the fertili"er %as at least as good as ad ertised, (The producti ity challenge, moderate) T%o summers ago 7;<< F 7<,<<< : ,7; lbs's., ft @ast summer 7E<< F 7<,<<< : ,7E lbs's., ft )hange (,7E ( ,7;) F ,7; : =9,A>

11!. "he >ulac <o) plant produces ,ooden packing bo)es to be used in the local seafood industry. Current operations allo, the company to make (33 bo)es per day% in t,o /-hour shifts 8!(3 bo)es per shift9. "he company has introduced some moderate changes in e uipment% and conducted appropriate Aob training% so that production levels have risen to #33 bo)es per shift. ?abor costs average K13 per hour for each of the ( full-time ,orkers on each shift. Capital costs ,ere previously K#%333 per day% and rose to K#%!33 per day ,ith the e uipment modifications. 6nergy costs ,ere unchanged by the modifications% at K&33 per day. :hat is the firm=s multifactor productivity before and after the changes0 MF- before1 =<< bo#es ' (G7<#=#78 H GA<<< H GD<<) : =<< ' D;<< : <,77E bo#es'dollar MF- after1 8<< bo#es ' (G7<#=#78 H GA;<< H GD<<) : 8<< ' DD<< : <,7A8 bo#es'dollar (The producti ity challenge, moderate) 11#. Fibson 7roducts produces cast bronze valves for use in offshore oil platforms. Currently% Fibson produces 1+33 valves per day. "he !3 ,orkers at Fibson ,ork from - a.m. until & p.m.% ,ith #3 minutes off for lunch and a 1( minute break during the morning ,ork session and another at the afternoon ,ork session. Fibson is in a competitive industry% and needs to increase productivity to stay competitive. "hey feel that a !3 percent increase is needed. Fibson=s management believes that the !3 percent increase ,ill not be possible ,ithout a change in ,orking conditions% so they change ,ork hours. "he ne, schedule calls on ,orkers to ,ork from -L#3 a.m. until &L#3 p.m.% during ,hich ,orkers can take one hour off at any time of their choosing. 'bviously% the number of paid hours is the same as before% but production increases% perhaps because ,orkers are given a bit more control over their ,orkday. $fter this change% valve production increased to 1/33 units per day. a. b. c. d. Calculate labor productivity for the initial situation Calculate labor productivity for the hypothetical !3 percent increase :hat is the productivity after the change in ,ork rules0 :rite a short paragraph analyzing these results.

(a) Wor$ers are acti e for eight hours per day+ labor producti ity is 7< al es'hour (b) -roducti ity rises by ;< percent, to 7; al es'hour+ output %ill be 7;#9#;< : 7E;< (c) Ie% producti ity is 79<< ' (;< # 9) : 77,;= al es'hour (d) Gibson did not gain the desired ;< percent increase in producti ity, but they did gain o er ten percent, %ithout e#tra e.uipment or energy, and %ithout increasing the %age bill, (The producti ity challenge, moderate)

18