BUSN 307 PRODUCTIONS AND OPERATIONS MANAGEMENT
QUIZ-1
October 31, 2013
QUESTION-1
Explain the relationship between operations management and finance.
ANSWER-1
Finance department needs operations department to realize production and inventory data,
budgeting requests, facility expansion and tech. plans. Operations department needs finance to
learn budgets, cost analysis, capital investments and stockholder requirements.
QUESTION-2
Explain service process and choose two types of process and compare them.
ANSWER-2
The service process is concerned with transforming a range of inputs into those outputs that
are required by the market.Professional service is highly customized and very labor intensive.
Service shop is less customized and labor intensive then professional service
QUESTION-3
a) A sandal company is able to produce with its current equipments 420 sandals per day
with using 3 labour hours per sandal. But the manager think to hire a new worker to
increase possessed labour hours by 8 hours per day, with those workers production
will increase to 475. What will be the impact on productivity if the workers are hired?
b) If the manager looks at his productivity from a multifactor (total factor productivity)
perspective. The total labour-hours and labour cost will increase with new worker. His
capital and energy costs will remain constant at $720 and $310 per day, respectively.
Material costs are $890 and will remain the same. If cost of labour is $6 per hour, find
the multifactor productivities. Then compare them and find the amount of increment.
ANSWER-3
a)
420*3=1260 available labor hours
1260+8=1268 with hiring a new worker available labor hours
Old system
new system
Single productivity is 420/1260=0,33
s. productivity is 475/1268=0,374
0,374/0,33 = 1,12 if a new worker hire, there will be %12 increment on labor productivity.
b) Costs
Labor cost
Capital
Energy cost
Material cost
1260*6=7560
720
310
890
+---------------9480
1268*6=7608
720
310
890
+--------------9528
Multifactor productivity is;
Before new worker 420/9480=0,044
With new worker 475/9528=0,049
0,049/0,044=1,133 if a new worker hire there will be %13,3 increment on labor productivity.
QUESTION-4
A farmer is going to plant each with wheat or corn. Each acre planted with wheat yields $200
profit; each with corn yields $300 profit. The labor and fertilizer used for each acre are given
in table. One hundred workers and 120 tons of fertilizer are available. Use LP graphic solution
to determine how she can maximize profits from her land.
Wheat
Corn
Labor
3 workers
2 workers
Fertilizer
2 tons
4 tons
ANSWER-4
Max z=200X1 + 300X2
50
3X1 + 2X2 <= 100
2X1 + 4X2 <=120
X1, X2 >= 0
30
3X1 + 2X2 = 100
X1=0 X2=50
X1=33 X2=0
2X1 + 4X2 =120
X1=0 X2=30
X1=60 X2=0
20
20
+
+
33
60
3X1 + 2X2 = 100* -2
2X1 + 4X2 =120
-6X1 – 4X2 = -200
2X1 + 4X2 =120
-4X1+0X2 =-80
X1=20
If X1 =20
3X1 + 2X2 = 100
3(20) +2(X2)=100
2(X2)=40
X2=20
A,B and C are the feasible points. A=(33,0)
which maximize profit.
Z=200 X1+ 300X2
For A=(33,0)
For B=(0,30)
For C=(20,20)
B=(0,30)
C=(20,20) to find the point
Z=200*33+300*0=6600
Z=200*0+300*30=9000
Z=200*20+20*300=10000
C point has the optimal solution.
QUESTION-5
ABC company’s design capacity is 58 units per week and effective capacity is 48 units per
week. Company has 9 machines and those machines work seven hours in a day and five days
in a week. After some researches, company has seen that they can produce 52 units per week
and approximately eleven hours in a week machines are not in use because of breakdowns.
According to those informations;
a) Calculate the machine utilization.
b) Calculate design capacity and effective capacity.
ANSWER-5
a) Machine utilization
9*7*5=315
(315-11)/315*100%=%96
b) Design capacity utilization = 52/58 *100%= %89
Effective capacity uti. = 52/48*100%= %108