Solutions for Operations Management 4ce Heizer
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C H A P T E R
Operations and Productivity
DISCUSSION QUESTIONS many other countries) are increasingly “knowledge” societies,
productivity is harder to measure. Using labour-hours as a meas-
1. The text suggests four reasons to study OM. We want to under- ure of productivity for a postindustrial society vs. an industrial or
stand (1) how people organize themselves for productive enterprise, agricultural society is very different. For example, decades spent
(2) how goods and services are produced, (3) what operations developing a marvellous new drug or winning a very difficult
managers do, and (4) this costly part of our economy and most legal case on intellectual property rights may be significant for
enterprises. post-industrial societies, but not show much in the way of
2. Possible responses include: Adam Smith (work specialization/ productivity improvement measured in labour-hours.
division of labour), Charles Babbage (work specialization/division of 10. Productivity is difficult to measure because precise units of
labour), Frederick W. Taylor (scientific management), Walter Shewart measure may be lacking, quality may not be consistent, and
(statistical sampling and quality control), Henry Ford (moving assem- exogenous variables may change.
bly line), Charles Sorensen (moving assembly line), Frank and Lillian
11. Mass customization is the flexibility to produce in order to
Gilbreth (motion study), Eli Whitney (standardization).
meet specific customer demands, without sacrificing the low
3. See references in the answer to Question 2. cost of a product-oriented process. Rapid product development
4. The actual charts will differ, depending on the specific organ- is a source of competitive advantage. Both rely on agility within
ization the student chooses to describe. The important thing is the organization.
for students to recognize that all organizations require, to a great- 12. Labour productivity in the service sector is hard to
er or lesser extent, (a) the three primary functions of operations, improve because (1) many services are labour intensive and
finance/accounting, and marketing; and (b) that the emphasis or (2) they are individually (personally) processed (the customer is
detailed breakdown of these functions is dependent on the spe- paying for that service—the haircut), (3) it may be an intellectu-
cific competitive strategy employed by the firm. al task performed by professionals, (4) it is often difficult to
5. The answer to this question may be similar to that for Question 4. mechanize and automate, and (5) it is often difficult to evaluate
Here, however, the student should be encouraged to utilize a more for quality.
detailed knowledge of a past employer and indicate on the chart 13. Taco Bell designed meals that were easy to prepare; with
additional information such as the number of persons employed to actual cooking and food preparation done elsewhere; automation
perform the various functions and, perhaps, the position of the to save preparation time; reduced floor space; manager training to
functional areas within the overall organization hierarchy. increase span of control.
6. The basic functions of a firm are marketing, accounting/
finance, and operations. An interesting class discussion: “Do all ETHICAL DILEMMA
firms/organizations (private, government, not-for-profit) perform With most of the ethical dilemmas in the text, the instructor
these three functions?” The authors’ hypothesis is yes, they do. should generate plenty of discussion. The authors are hesitant to
7. The 10 decisions of operations management are product de- endorse a particular correct answer, and students may well be on
sign, quality, process, location, layout, human resources, supply- both sides of this dilemma.
chain management, inventory, scheduling (aggregate and short Many students will be inclined to accept the child labour
term), and maintenance. We find this structure an excellent way laws of their home country. For instance, Americans accept
to help students organize and learn the material. teenagers working. But Germans (and others) are more likely to
8. Four areas that are important to improving labour productivi- expect teenagers to be home studying or in an apprentice program;
ty are: (1) basic education (basic reading and math skills), (2) diet they frown upon teenagers working. Students raised in more
of the labour force, (3) social overhead that makes labour avail- affluent environments may not understand children working.
able (water, sanitation, transportation, etc.), and (4) maintaining However, those who had to scrape by in their youth or had parents
and expanding the skills necessary for changing technology and that did may be more sympathetic to 10-year-olds working.
knowledge, as well as for teamwork and motivation. From an economic and self-preservation perspective many
10-year-olds do work and need to work. There are still a lot of
9. Productivity is harder to measure when the task becomes
poor people in the world. Such a decision may endorse the moral
more intellectual. A knowledge society implies that work is more
philosophy perspective defined as a utilitarianism decision.
intellectual and therefore harder to measure. Because Canada (and
1
,2 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
A utilitarianism decision defines acceptable actions as those that Resource Last Year This Year Change Percent Change
1.6
maximize total utility, that is, the greatest good for the greatest
number of people. 1, 000 1, 000 0.31
Labour = 3.33 = 3.64 0.31 = 9.3%
From a Canadian corporate management perspective, 300 275 3.33
companies cannot tolerate the publicity that goes with hiring 10-
year-olds. These companies need to have standards that prohibit 1, 000 1, 000 2.22
Resin = 20 = 22.22 2.22 = 11.1%
such actions by their subcontractors. The moral philosophy per- 50 45 20
spective might call this the virtue ethics position—the decision
1, 000 1, 000 –0.01
that a mature person with a good moral character would deem Capital = 0.1 = 0.09 –0.01 = –10.0%
correct. 10, 000 11, 000 0.1
END-OF-CHAPTER PROBLEMS Energy
1, 000
= 0.33
1, 000
= 0.35
0.02
= 6.1%
3, 000 2, 850 0.02 0.33
120 boxes
1.1 (a) = 3.0 boxes/hour
40 hours
1.7 Last Year This Year
125 boxes Production 1,000 1,000
(b) = 3.125 boxes/hour
40 hours Labour hr. @ $10 $3,000 $2,750
Resin @ $5 250 225
(c) Change in productivity = 0.125 boxes/hour Capital cost/month 100 110
0.125 boxes Energy 1,500 1,425
(d) Percentage change = = 4.166%
3.0 $4,850 $4,510
1.2 (a) Labour productivity is 160 valves/80 hours = 2 valves
[(1,000/4,850) − (1,000/4,510)]
per hour. =
(1,000/4,850)
(b) New labour productivity = 180 valves / 80 hours =
2.25 valves per hour 0.206–0.222 –0.016
= = 0.078 fewer resources
(c) Percentage change in productivity = .25 valves / 2 0.206 0.206
valves = 12.5% ⇒ 7.8% improvement*
57,600 * with rounding to 3 decimal places.
1.3 0.15 = , where L number of labourers
(160)(12)( L ) Output
employed at the plant 1.8 Productivity =
Input
57,600 65 65
So L = = 200 labourers employed (a) Labour productivity = =
(160)(12)(0.15) (520 × 13) $6,760
= 0.0096 rugs per labour $
1.4 The U.S. Bureau of Labor Statistics (stats.bls.gov) is prob-
ably as good a place to start as any. Results will vary for each 65
(b) Multifactor
year, but overall data for the economy will range from .9% to productivity (520 × $13) + (100 × $5) + (20 × $50)
4.8% and mfg. could be as high as 5% and services between 1%
and 2%. The data will vary even more for months or quarters.
65
The data are frequently revised, often substantially. = = 0.00787 rugs per $
$8, 260
Units produced 100 pkgs
1.5 (a) = = 20 pkgs/hour 1.9 (a) Labour productivity = 1,000 tires/400 hours = 2.5
Input 5
tires/hour.
133 pkgs (b) Multifactor productivity is 1,000 tires/(400 ×
(b) = 26.6 pkgs per hour
5 $12.50 + 20,000 × $1 + $5,000 + $10,000) =
1,000 tires/$40,000 = 0.025 tires/dollar.
6.6
(c) Increase in productivity = = 33.0% (c) Multifactor productivity changes from 1,000/40,000 to
20
1,000/39,000, or from 0.025 to 0.02564; the ratio is
1.0256, so the change is a 2.56 % increase.
, CHAPTER 1 OPERATIONS AND PRODUCTIVITY 3
1.10 Last Year This Year Change Percent Change
1,500 1,500 0.33
Labour hrs. = 4.29 = 4.62 = 7.7%
350 325 4.29
1,500 1,500 – 0.02
Capital invested = 0.10 = 0.08 = –20%
15, 000 18, 000 0.1
1,500 1,500 0.05
Energy (BTU) = 0.50 = 0.55 = 10%
3, 000 2,750 0.50
Productivity of capital did drop; labour productivity increased as did energy, but by less than the anticipated 15%.
Note: Rounding is used in the calculations. (b) Investment change:
1,500 1,500
1.11 Multifactor productivity is: = = 0.293 loaves/$
(640 × $8) 5,120
375 autos/[($20 × 10,000) + ($1,000 × 500) +
($3 × 100,000)] = 375/(200,000 + 500,000 + 1,875 1,875
= = 0.359 loaves/$
300,000) = 375/1,000,000 (640 × 8) + (100) 5,220
= 0.000375 autos per dollar of inputs .293 − .293
(c) Percent change : = 0 (labour)
1.12 (a) Before: 500/20 = 25 boxes per hour; .293
.359 − .293
After, 650/24 = 27.08 Percent change : = 0 .225
.293
(b) 27.08/25 = 22.5% (investment)
= 1.083, or an increase of 8.3% in productivity
Note: Rounding is used in the calculations.
(c) New labour productivity = = 29.167
boxes per hour 1,500
1.15 Old process =
(640 × 8) + 500 + (1,500 × 0.35)
1.13 1,500 × 1.25 = 1,875 (new demand) 1,500
= = 0.244
Outputs 6,145
= Productivity
Inputs 1,875
New process =
1,875 (800 × 8) + 500 + (1,875 × 0.35)
= 2.344
labour-hours 1,875
= = 0.248
1,875 7,556.25
New process = ≅ 800 labour-hours
2.344 0.248-0.244
Percent change = = 1.6%
800 0.244
= 5 workers
160
6,600 vans
1,500 1.16 (a) = 0.10
Current process = = 2.344 x labour-hours
labour-hours x = 66,000 labour-hours
1,500
= labour-hours ≅ 640
2.344 There are 300 labourers. So,
640
= 4 workers 66,000 labour-hours
160 = 220 labour-hours/labourer on average, per month
300 labourers
Add one worker.
1.14 (a) Labour change: 6,600 vans
(b) Now = 0.11, so x = 60,000 labour-hour
x labour-hours
1,500 1,500
= = 0.293 loaves/$ 60,000 labour-hours
(640 × $8) 5,120 so, = 200 labour-hours/labourer
300 labourers on average, per month
1,875
= 0.293 loaves/$
(800 × $8) $ output 52($90) + 80($198)
1.17 =
Labour-hour 8(45)
20,520
= = $57.00 per labour-hour
360
, 4 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
1,500 Quality: The standards for each ingredient, including its
1.18 Last year =
(350 × 8) + (15,000 × 0.0083) + (3,000 × 0.6) purity and quality, must be determined.
1,500 Process: The process that is necessary to produce the product
=
2,800 + 124.50 + 1,800 and the tolerance that must be maintained for each ingredient
1,500 by each piece of equipment must be specified and procured.
= = 0.317 doz / $
4,724.5 Location: The fixed and variable costs of the facility, as well
1500 as the transportation costs in and the delivery distance, given
This year = the freshness, must be determined.
(325 × 8) + (18,000 × 0.0083) + (2,750 × 0.6)
= 0.341 doz / $ Layout: The Frito-Lay facility would be a process facility,
with great care given to reducing movement of material
0.341 − 0.317
Percentage change = within the facility.
0.317
= 0.076, or 7.6% increase Human resources: Machine operators may not have
inherently enriched jobs, so special consideration must be
CASE STUDY given to developing empowerment and enriched jobs.
UBER TECHNOLOGIES, INC. Supply chain: Frito-Lay, like all other producers of food
First, some drivers (maybe most) may not require a wage that products, must focus on developing and auditing raw
equals those fully engaged in the “taxi” business. It truly could material from the farm to delivery.
be a supplemental income … “I’m going that way anyhow so
let’s make a few dollars while on the way.” Similarly, the capital Inventory: Freshness and spoilage require constant effort to
investment cost approaches zero as the car is going that direction drive down inventories.
anyhow. These are idle or underutilized resources. Scheduling: The demand for high utilization of a capital-
From society’s perspective, Uber and its competitors are desira- intensive facility means effective scheduling will be important.
ble because both idle or wasted labour and capital resources are
being utilized. At the same time, as a bonus, Uber is reducing Maintenance: High utilization requires good maintenance, from
traffic and auto pollution while speeding up the transport of machine operator to the maintenance department and depot
individuals and local commerce. service.
As a competitor for the traditional taxi service, Uber seems to be 2. Determining output (in some standard measure, perhaps
an enhancement in efficiency. pounds) and labour-hours would be a good start for single-factor
For those faculty who want to spend some time on the larger productivity.
productivity message, this case provides such an opportunity. For multifactor productivity, we would need to develop and
Uber, as Joseph Schumpeter would suggest, has developed a understand capital investment and energy, as well as labour, and
disruptive technology (creative destruction, in a Schumpeterian then translate those into a standard, such as dollars.
translation). Innovations such as this are exactly how economic
efficiency is enhanced. The traditional taxi services, with some 3. Hard Rock performs all 10 of the decisions as well, only
imagination, could have developed and adopted this technology, with a more service-sector orientation. Each of these is dis-
but most were ensconced in their own regulatory cocoon. As is cussed in the solution to the Hard Rock Cafe case.
often the case, it takes an outsider such as Uber to be creative by
putting unused resources to use and providing society greater 2 FRITO-LAY: OPERATIONS MANAGEMENT
efficiency. IN MANUFACTURING
There is a short video (7 minutes) available from on MyLab Op-
VIDEO CASE STUDIES erations Management and filmed specifically for this text that sup-
plements this case.
1 HARD ROCK CAFE: OPERATIONS 1. Hard Rock’s 10 Decisions: This is early in the course to dis-
MANAGE IN SERVICES cuss these in depth, but still a good time to get the students engaged
This case provides a great opportunity for an instructor to stimulate in the 10 OM decisions around which the text is structured.
a class discussion early in the course about the pervasiveness of the Product design: Hard Rock’s tangible product is food and like
10 decisions of OM with this case alone or in conjunction with the any tangible product it must be designed, tested, and “costed
Hard Rock Cafe case. A short video accompanies the case. out.” The intangible product includes the music, memorabilia,
and service.
1. Frito-Lay's 10 Decisions:
Product design: Each of Frito-Lay’s 40-plus products must
be conceived, formulated (designed), tested (market studies,
focus groups, etc.), and evaluated for profitability.
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