Operations Management’s
Instructor Manual by
Dr. M. Khurrum S. Bhutta
Operations Management
Fourteenth Edition
Lee J. Krajewski
Manoj K. Malhotra
** Immediate Download
** Swift Response
** All Chapters included
, Chapter
1 Using Operations to Create Value
DISCUSSION QUESTIONS
1. Answering this question demonstrates that processes underlie all of our jobs. What might
be surprising is how many students would put their job in the category of “other,”
suggesting that many jobs do not fall neatly into any one functional area. Perhaps many
in the “other” category might best be called “operations” on further reflection.
Customers, both internal and external, are part of each process, and the goal is to manage
the processes to add the most value for them.
2. The hospital’s commitment to provide attention to patients arriving to the emergency
unit in less than 15 minutes and never to turn away patients who need to be hospitalized
implies that the facility must be designed to have extra capacity in both beds and
emergency room facilities. It must plan on having extra personnel in the emergency
room and also plan on having additional emergency personnel on call to take care of
unprecedented heavy loads. In line with the mission statement, maximum utilization of
the facilities (i.e., beds and emergency room personnel) would not be one of the
performance objectives for the hospital.
3. Core processes should link to a firm’s core competencies. Core processes are those
processes that provide the firm the best competitive advantage. Essential to the
definition a firm’s core processes is the concept of “interaction costs.” These costs
include the time and money that are expended whenever people and companies
exchange services, products, or ideas. If the transaction costs are higher to retain a
process within the firm’s organization than to outsource the process, the process
should be outsourced.
PROBLEMS
Trends and Challenges in Operations Management
1. Boehring University
a. Value of output:
students credit-hours $200 tuition $100 state support
75 3 $67,500 class
class student credit-hours
Value of input: labor + material + overhead
1-1
,1-2 Using Operations to Create Value CHAPTER 1
$25
$6500 75 students $30, 000
student $38,375 class
class
Multifactor Productivity ratio:
Output $67,500
Productivity 1.76
Input $38,375
Compared to Solved problem 1, multifactor productivity has increased from
1.25 to 1.76.
b. Value of output is the same as in part a: $67,500 class
Labor-hours of input:
hours weeks hours
20 16 320
week class class
Productivity ratio:
Output $67,500
Labor Productivity $210.94 hour
Input 320 hours
The $192 season ticket price is not used in this calculation. It is a “red herring.”
2. Suds and Duds Laundry
a. Labor productivity
Number of Input Output Output/Input
Week Workers (Labor-hours) (Shirts) Ratio
1 2 24 68 2.83 shirts/hour
2 2 46 130 2.83 shirts/hour
3 3 62 152 2.45 shirts/hour
4 3 51 125 2.45 shirts/hour
5 2 45 131 2.91 shirts/hour
b. Output per person does not vary much whether it is Sud, Dud, or Jud working.
Productivity declines when all three are present. Perhaps there isn’t enough work to
keep three persons occupied, or perhaps there is not enough work space or
equipment to accommodate three workers.
, Using Operations to Create Value CHAPTER 1 1-3
3. White Tiger Electronics compact disc players
Value of Output: $300
Value of Input: Labor + Materials + Overhead
Ouput $300
Productivity 2.000
Input $30 $70 $50
10% productivity improvement 2.00 110 . 2.200
Given productivity 2.20 , and the value of output $300, we solve for the cost of
inputs:
Ouput $300
Productivity 2.20
Input Input
$300
Input $136.36 or $136
2.2
The cost of inputs must decrease by $150 $136 $14 .
a. A $14 reduction in material costs is $14 $70 20.00%
b. A $14 reduction in labor costs is $14 $30 46.67%
c. A $14 reduction in overhead is $14/$50 = 28.00%
4. Symtecks
The output of a process is valued at $100 per unit. The cost of labor is $50 per hour
including benefits. The accounting department provided the following information
about the process for the past four weeks:
Week 1 Week 2 Week 3 Week 4
Units Produced 1124 1310 1092 981
Total Value 112,400 131,000 109,200 98,100
Labor ($) 12,735 14,842 10,603 9526
Labor (hrs) 254.7 296.8 212.1 190.5
Material ($) 21,041 24,523 20,442 18,364
Overhead ($) 8,992 10,480 8,736 7,848
Multifactor Productivity 2.63 2.63 2.75 2.75
Labor Productivity 4.41 units/hr 4.41units/hr 5.15 units/hr 5.15 units/hr
a. Use the multifactor productivity ratio to see whether recent process
improvements had any effect and, if so, when the effect was noticeable.
Value of output
1124units $100 $112, 400
Value of input: labor + material + overhead
$12,735 + $21,041 + $8,992 = $42,768
Productivity ratio:
Output
Labor Productivity
Input
