For all the problems, to receive full scores, you have to show your complete and accurate work. If you only provide the final answers without showing your computations, you will not be assigned a full score (or you will miss the opportunity of receiving partial credit).

 

Problem 1: Productivity and Productivity Growth (8 points)

The labor hours and units processed by your manufacturing facility are shown below.

	Oct	Nov	Dec
Labor Hours	9,789	8,256	8,109
Units Processed	602,589	659,221	615,892

 

What is the productivity (in terms of units per labor hour) for each of the three months? (3 points)

What is the productivity growth from October to December? (2 points)

If the average hourly wage is $12.50/hour, what is the productivity (in terms of units per labor dollar) for December? (2 points)

 

Problem 2: Efficiency and Utilization (8 points)

The engineering department has determined the standard output for a workstation is 914 units per hour. Assume this workstation was used 8 hours yesterday and produced 6,677 units.

What was the efficiency of the workstation yesterday? (2 points)

What output level would be needed to achieve 95% efficiency at this workstation? (2 points)

The greatest output this workstation could possibly achieve in a day is 22,991 units. What was yesterday’s utilization? (2 points)

What output level would be needed to achieve 95% utilization at this workstation? (2 points)

 

Problem 3: Total Cost and Breakeven Point (9 points)

Use the following variable and fixed costs for Speedy Oil Change to answer the questions below.

Variable Costs:

Oil	$3	per oil change
Labor	$6	per oil change
Supplies	$2	per oil change

 

Fixed Costs:

Building Lease	$4,000	per month
Property Taxes	$3,500	per year
Property Insurance	$200	per month
Liability Insurance	$3,000	per year

 

What is the total annual fixed cost for Speedy Oil Change? (2 points)

What is the total variable cost (per oil change) for Speedy Oil Change? (2 points)

If Speedy Oil Change performed 5,000 oil changes last year, what was its total cost? (2 points)

How many oil changes does Speedy Oil Change need to perform in a year at $30 per oil change to break even? (3 points)

 

Extra Credit: Little’s Law (5 points)

A computer repair company works five days per week and last week had the following new orders and end of day inventory levels. This company should be assumed to be operating at steady state so Little’s Law can be applied.

	Orders	Ending On Hand (EOH) Units
Monday	37	11
Tuesday	41	9
Wednesday	54	22
Thursday	62	24
Friday	31	14

 

What is the average arrival of orders per day? (1 point)

What is the average end of day inventory level? (1 point)

Using Little’s Law, what is the average amount of time a computer spent at the company Monday through Friday last week? (3 points)