Chapter 1 Problems – Heizer and Render. COB 300C, Dr. Busing
1.13. Capacity Issues with Bread Oven:
Old Labor Productivity: (bread output)/(labor input) = labor productivity
(note: the problem tells us “labor productivity” so we need to solve for “labor input”
1500/(X) = 2.344
where X is number of labor hours input last year.
Solving for X, we find that Lackey’s bakery used approximately 640 labor hours per month. If
each employee works 160 hours per month, this is the same as having approximately 4
employees working in the bakery.
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New Labor Productivity: Note: 25% increase in output = 1875 loaves of bread
1875/(X) = 2.344
where X is the NEW number of labor hours needed this year.
Solving for X, we find that the new number of labor hours required is approximately 800 per
month. If employees continue to work 160 hours per month, this is the same as needing 5
employees working in the bakery.
Lackey needs to add 1 employee. Total increased cost = 1 X 160 X $8 = $1280 per month.
1.14. New Blender to Increase Yield:
a. Productivity change with increase in labor:
NOTE: Above we looked at “labor productivity” in terms of loaves of bread produced per hour.
Here we should look at “labor productivity” loaves produced per dollar spent.
4 employees: 1500/(640 X $8) = 0.293 loaves produced per dollar spent on labor
5 employees: 1875/(800 X $8) = 0.293 loaves produced per dollar spent on labor
0 percent change in productivity.
b. Productivity change with new blender ($100 additional per month) (note: example of mixed
denominator). Assume that we keep 5 employees with the new blender. 1875/((640X$8) + 100)
= 0.359 loaves produced per dollar spent on the process
(0.359 – 0.293) / 0.293 = 0.2253 = 22.5% change in productivity because of the new blender.
1.15 Utility costs at $500 per month (unchanged with additional employees) and raw
materials (i.e., ingredients) cost $0.35 per loaf of bread
(note that each loaf of bread is 1 pound – author doesn’t make this clear in problem)
4 employees: 1500 / ((640 x $8) + 500 + (1500 x 0.35)) = 0.2441
5 employees: 1875 / ((800 x $8) + 500 + (1875 x 0.35)) = 0.2481
Percent Change: (0.2481 – 0.2441)/0.2441 = .0165 = 1.65% increase in overall productivity.
Explain why we received a 1.65% gain in productivity when we include the other factors.