OPERATIONS MANAGEMENT Week 10

OPERATIONS MANAGEMENT
The set of activities that relate to the creation of goods
and services through the transformation of inputs to outputs
PRODUCTIVITY
The ratio of outputs (goods and services) to one or more
inputs (such as labor, capital and management)
MATHEMATICAL FORM…

Productivity = Units produced / Input used

Common inputs are Labor-Hours, capital (dollar invested),

materials (tons of ore), or energy (kilowatts)
FOR EXAMPLE…
Units produced = 1000
Labor-hours = 250

Productivity = Units produced / Labor-hours

= 1000 units / 250 Labor-hours
= 4 units / Labor-hours
TYPES OF PRODUCTIVITY
Single Factor Productivity
The use of one resource to measure productivity

Multi-factor Productivity
A broader view of productivity which includes all inputs (capital,
labor, material, energy)
 MULTIFACTOR PRODUCTIVITY

Productivity = Output / (Labor+Material+Energy+Capital+Misc.)

PROBLEM 1
John makes wooden boxes in which motorcycles are shipped. John
and his three employees invest a total of 40 hours per day making
120 boxes.
a) What is their productivity?
b) John and his employees have discussed redesigning the process
to increase productivity. If they can increase the rate to 125
boxes per day, what is their productivity with the new
arrangement?
c) What will be their percentage increase in productivity?
PROBLEM 2
Riverside Metal Works produces valves on a 10 person assembly line. On a
recent day, 160 valves were produced during an 8 hour shift.

a) Calculate the labor productivity of the assembly line

b) The operations manager at Riverside changed the layout and was able to
increase production to 180 units per 8 hour shift. What is the new labor
productivity per labor hour?
c) What is the percentage of productivity increase?
PROBLEM 3
Collins Title wants to evaluate its labor and multifactor productivity
with a new computerized title search system. The company has a
staff of four, each working 8 hours per day (for a payroll cost of
$640/day) and overhead expenses of $400 per day. Collins
processes and closes on 8 titles each day. The new computerized
title search system will allow the processing of 14 titles per day.
Although the staff, their work hours and pay are the same, the
overhead expenses are now $800 per day.
PROBLEM 4
Kleen Karpet cleaned 65 rugs in October consuming the
following resources:
Labor: 520 hours at $15 per hour
Solvent: 100 gallons at $5 per gallon
Machine rental: 20 days at $50 per day

a) What is the labor productivity per dollar?

b) What is the multifactor productivity?