Operations Management Problems 1 & 5
1. Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to $30,000 per class section from the current $25,000 per class section. The university’s budget plan is to cover recruitment costs by increasing the average class size to 75 students. Labor costs will increase to $6,500 per three-credit course. Material costs are about $25 per student for each three-credit course. Tuition will be $200 per semester credit, which is matched by state support of $100 per semester credit.
a. What is the productivity ratio? Compared to the result obtained in Example Solution, did productivity increase or decrease for the course process?
b. If instructors work an average of 20 hours per week for 16 weeks for each three-credit class of 75 students, what is the labor productivity ratio?
5. The Big Black Bird Company (BBBC) has a large order for special plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 40 hours, the BBBC production process usually produces 2,500 uniforms per week at a standard cost of $120 each. Seventy employees work the first shift and 30 the second. The contract price is $200 per uniform. Because of the urgent need, BBBC is authorized to use around the-clock production, six days per week. When each of the two shifts works 72 hours per week, production increases to 4,000 uniforms per week but at a cost of $144 each.
a. Did the productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did it change?
b. Did the labor productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did it change?
c. Did weekly profits increase, decrease, or remain the same?
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SOLUTION PREVIEW
Productivity ratio = output
Input
Value of output = (75
students)*(3 credit course)*($200 tuition + 100 state support)
Class student credit course
= $67500/
class
Value of input = Labor
cost + material cost + overhead cost
= 6500 +
($25 * 75 students) + 30000 = 38375
