Productivity problems with answers PDF

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Sultan Qaboos University College of Economics and Political Science Department of Operations Management and Business Statistics Practice problems Productivity 1. A company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 25% with less material, but one additional worker required. Under the old process, five workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previously $16/unit. For the new process, material is now $10/unit. Overhead is charged at 1.6 times direct labor cost. Finished units sell for $31 each. What increase in productivity is associated with the process improvement? a) 24.8% b) 39.83% c) 48.82% d) 60% e) There was no improvement. Productivity decreased. Old Output: 60 units per hour New Output: 60+0.25*60 = 75 units per hour Old Productivity = 60 5 *12  1.6 * 5 *12  16 * 60  0.05377 New Productivity = 75 6 * 12  1.6 * 6 * 12  10 * 75   0.08 Increase in productivity = 0.08 – 0.05377/0.05377 * 100 = 48.78% Answer is C

2. Suppose that on Monday the cost of inputs sums to $1000, and the value of outputs sums to $4000. For which of the following values on Tuesday would productivity increase? a) inputs = $1100, outputs = $4000 b) inputs = $1100, outputs = $4200 c) inputs = $850, outputs = $3600 will result in higher productivity than Monday's d) inputs = $1000, outputs = $3900 3. A firm produces 500 units per day using five workers on a five-hour shift. On average, 15% of the units produced are defective and must be scrapped. What is the hourly labor productivity for non-defective units? a) 17 units/hour b) 3 units/hour c) 20 units/hour d) 85 units/hour e) 15 units/hour Non-defective units = 500-0.15*500 = 425 Hourly labor productivity = 425/5*5 = 17units/hour. Answer is A

4. The Gulf Box Company produces packing boxes to be used in the local food industry. Last month, the company was able to make 400 boxes per day, in two 8-hour shifts (200 boxes per shift). In the current month, the company has introduced some changes in equipment, and conducted appropriate job training, so that production levels have risen to 250 boxes per shift. Labor costs average RO 3 per hour for each of the 5 full-time workers on each shift. Capital

costs were previously RO 1,000 per day, and rose to RO 1,100 per day with the equipment modifications. Energy costs were unchanged by the modifications, at RO 150 per day. (a)

What is the daily labor productivity after the change?

Labor productivity =

(b)

= 2.5 boxes/RO

=

What is the daily multifactor productivity before the changes?

Multifactor productivity before (c)

=

= 0.36 boxes/RO

What is the daily multifactor productivity after the changes?

Multifactor productivity after (d)

=

=

=

What is the growth in multifactor productivity?

Growth =

X 100 = 11.11%

= 0.40 boxes/RO...