Operations Management
Chapter 1 Homework
1) Why should one study operations management? (2 points)
Answer: Operations management is very important because it helps us study how people
organize themselves for productive enterprises. Through operations management, we can
know how goods and services are produced and understand the role operations managers
such as planning, organizing, staffing leading and controlling which all together play to
ensure the smooth running of businesses
2) Figure 1.1 in your textbook the outlines operations, finance/accounting, and marketing
functions of three (3) organizations. Prepare a chart similar to Figure 1.1 (or Power Point
slides 8-11) outlining the same functions for one of the following (4 points):
a) A newspaper
b) a drugstore
c) a college library
d) a summer camp
e) a small costume-jewelry factory
Answer:
Drugstore
Marketing
Operations
•Managing
inventory of
medicines and
other products
•Managing staff
schedules and
store operations
•Filling
prescriptions
accurately and
promptly
• Maintaining
store
cleanliness and
customer service
Accounting
•Budgeting for stock
purchases and salaries
•Monitoring profit
margins on different
products
•Tracking revenue and
expenses
•Financial reporting for
taxes and compliance
•Promoting
discounts and
special offers
•Loyalty programs
to retain
customers
•Engaging
customers via
social media or
flyers
•Advertising
seasonal products
(e.g., cold and
flu remedies)
3) Name the 10 decision areas of operations management (2 points).
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
Answer: Design of goods and services
Managing quality
Process and capacity strategy
Location strategy
Layout strategy
Human resources and job design
Supply-chain management
Inventory management
Scheduling
Maintenance
4) Name four (4) areas that are significant to improving labor productivity (4 points).
a. Answer: Basic education appropriate for the labor force
b. Diet of the labor force
c. Social overhead that makes labor available
d. Motivation and engagement of labor
5) John Lucy makes wooden boxes in which to ship motorcycles. John and his three
employees invested a total of 40 hours per day making the 120 boxes (4 points).
a) What is their productivity?
Answer: Output = 120 boxes
Input = 40 hours per day
120
Productivity = 40 = 3 𝑏𝑜𝑥𝑒𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟
b) John and his employees have discussed redesigning the process to improve efficiency.
If they can increase the rate to 125 per day, what will be their new productivity?
Answer: Output =125 hours
Input = 40 hours per day
125
Productivity = 40 = 3.125 𝑏𝑜𝑥𝑒𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟
c.) What will be their unit increase in productivity per hour?
Answer: Unit increase in productivity = New productivity per hour – Old productivity per
hour
3.125 boxes per hour – 3 boxes per hour = 0.125 boxes per hour
Unit increase in productivity per hour = 0.125 boxes per hour
d.) What will be their percentage change in productivity?
Answer: Percentage change in productivity =
(3.125−3)
3
× 100 = 4.17%
6) Kleen Karpet cleaned 65 rugs in January, consuming the following resources (4 points):
Labor: 520 hours at $13 per hour
Solvent: 100 gallons at $5 per gallon
Machine Rental: 20 days at $50 per day
a) What is the labor productivity (i.e., single factor productivity) per dollar?
Labor productivity per dollar
Labor cost = 520 hours ×$13 per hour=$6,760
𝑂𝑢𝑡𝑝𝑢𝑡
65 𝑟𝑢𝑔𝑠
Labor productivity = 𝐿𝑎𝑏𝑜𝑟 = $6760 = 0.0096 𝑟𝑢𝑔𝑠 𝑝𝑒𝑟 𝑑𝑜𝑙𝑙𝑎𝑟
b) What is the multifactor productivity?
Labor cost = 520 hours ×$13 per hour=$6,760
Solvent cost = 100 gallons ×$5 per gallon=$500
Machine Rental cost = 20 days ×$50 per day=$1,000
65
65
Multifactor productivity = (6760+500+1000) = 8260 = 0.0079 𝑟𝑢𝑔𝑠 𝑝𝑒𝑟 𝑑𝑜𝑙𝑙𝑎𝑟𝑠