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Productivity Measurement

&

Product Development Project


Operations Management MM 5004

Oleh : Jeanette Karina / 29112010 Fikhi Adrian / 29112014 Molly Sitompul / 29112027 Adinda Ayu Lestari / 29112044 Fandy Mahatmajaya / 29112052 Yongke Yoswara / 114512026

MASTER OF BUSINESS ADMINISTRATION INSTITUT TEKNOLOGI BANDUNG 2012

Chapter 2 : Productivity Measurement (page 70-71)

1. Find the average monthly productivity (units per hour).


Jan Unit produced 2,300 Hours per machine 325 Number of machines 3 Productivity 2.358974359 Average monthly productivity Feb 1,800 200 5 1.8 Mar 2,800 400 4 1.75 Apr 3,000 320 4 2.34375 2.06318109

2. Calculate the productivity in sales revenue / labor expense.


Units sold Sale price each Total labor hours Wage rate Total materials Total energy 1,217 $ 1,700 46,672 $ 12 per hour $ 60,000 $ 4,000

Sales revenue Labor expense Productivity

$ 2,068,900 $ 560,064 3.694042109

3. Find the total productivity.


Output Cages Sales price Input 50,000 Production time $ 3.50 per unit Wages Raw materials (total cost) Component parts (total cost) $ 175,000 Total Input Total Productivity 620 labor hours $ 7.50 per hour $30,000 $15,350 $ 50,000 3.5

Total Output

4. What is the labor productivity for each car?


Deluxe car Limited car Labor, Deluxe Labor, Limited Labor Productivity (Deluxe) Labor Productivity (Limited) Quantity 4,000 units sold 6,000 units sold 20,000 hours 30,000 hours $ / Unit $ 8,000 / car $ 9,500 car $ 12 / hour $ 14 / hour 0.2 0.2

Explain the problem(s) associated with the labor productivity.


The result of labor productivity depends on : product quantity and working hours. As the result of the measurement, the labor productivity for each car is less than 1.0. Theoretically, the activities arent productive. It happened because car production has a quite complex process. So, the car manufacturer needs less product quantity or more workers to make it more productive.

6. Calculate the total productivity measure and the partial measures for labor, capital, and raw materials for this company for both years.
Output : Input : Sales Labor Raw materials Energy Capital Other 2009 $ 200,000 30,000 35,000 5,000 50,000 2,000 1.639344262 6.666666667 4 5.714285714 2010 $ 220,000 40,000 45,000 6,000 50,000 3,000 1.527777778 5.5 4.4 4.888888889

Total Productivity Labor Productivity Capital Productivity Raw Materials Productivity

What do these measures tell you about this company?


The Total Productivity of this company is bigger in 2009 rather than 2010. Meanwhile the partial Productivity of this company is bigger in 2009 rather than 2010, except in capital productivity. It occurs because the number of sales is increased in 2010 but the number of capital remains the same.

10. If the restaurant sold 700 hamburgers, 900 cheeseburgers, and 500 chicken sandwiches in one week, what is its productivity?
Equation Cheeseburger = Chicken sandwich = Employee Labor hours / week Output-1 Hamburger Cheeseburger Chicken sandwiches Total Output-1 (in hamburger) Total productivity-1 = 11.125 1.25 Hamburger 0.8 Hamburger 5 40 Multiply 700 900 500 Units in Hamburger 1 700 1.25 1,125 0.8 400 2,225

What would its productivity have been if it had sold the same number of sandwiches (2,100) but the mix was 700 of each type?

Output-2 Hamburger Cheeseburger Chicken sandwiches Total Output-2 (in hamburger) Total productivity-2 =

Multiply 700 700 700

Units in Hamburger 1 700 1.25 875 0.8 560 2,135

10.675