Operation Mangement – Math Problem Example

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Question oneProductivity = {Output of a specific Product}/ {Input of a specific Resource}Total jackets produced = 100 Good quality product = 80%*100 = 80 jackets per monthHours of input = 11 hours per jacket 100 jackets = (11*100) = 1100hoursProductivity = (80*450)/1100hours = 32.73$/hr Multifactor productivity ratio= [Quantity at standard cost]/ [Labour cost + Materials cost + Overhead cost]Overhead cost = $ 6000Material cost = (150*100) = $ 15000Labour cost = (1100*9) = $9900Standard cost =36,000 / (6000 + 15000 +9900) Multifactor productivity ratio = 36,000 /30900 Multifactor productivity ratio = 1.17Operations resources consist of what we term the five Ps; People, plants, parts, processes, planning & Control.

İn order to establish the productivity of a given process, all the fives p’s must be considered and the higher the productivity ratio the better the process. From the process, the company output is 32.73 dollars per hour meaning within one hour company is able to produce an output of 32.73. using this figure, the management is able to manupulate the various factors in order to improve the productivity of its workforce at any given time.

Using mltifactor productivity ratio of 1.17, he is able to validate ist cause and influence the output either by manipulating the labor cost or sales price per unit. After some study, Nick is considering three options to improve the multifactor productivity ratio Increasing sales by 10%= (36000*110%)= 39600Multifactor productivity ratio = 39600/30900 = 1.28Improve quality so that only 15% are defective That means 85% will be good Sales = (85*450) = $ 38,250Multifactor productivity ratio =$ 38,250/30900 = 1.24Reduce labour, material, and overhead costs by 10%. Total cost = 30900 10% reduction = 27,810 Multifactor productivity ratio =36,000/27,810 = 1.29Using the first multifactor productivity ratio as the base, when sales are increased by 10%, the percentage change in multifactor productivity will be given by (1.28-1.17)/ 1.17 = 9.4% increase in the multi-productivity factor.

If the management decides to improve production efficiencies to 85%, then the multifactor productivity will increase by (1.24 -1.17)/1.17 = 5.98% increase. And lastly if the management decides to reduce the labour cost by 10% then the multifactor productivity will increase by (1.29-1.17)/1.17 = 10.26%.

Therefore, if the management decides to reduce the production cost then it will have the greatest impact on the multifactor productivity ratio (Duncan 2006). Significance of Operations Management to this (or any) business Operation management in most cases is considered as a multi-disciplinary filed that focuses mostly in all aspects of the organization operations. It involves overseeing, designing, controlling the production process and designing of various business operations to aid in the production of goods and services. Operation management helps in efficient planning and forecasting of production process. Running an efficient production process requires a great deal of planning and includes long range of decision making process and all decisions are aimed at meeting customer need.

This can only be achieved through efficient planning which is a function of operation management. Operation management also help in managing the system, it involve working with people to encourage them to improve organization performance. For instance, in the example above, the management gives specific target to each employee and throughout they are encouraged to work hard and meet their targets.

Lastly operation management helps in understanding business operations and helps in contributing towards organization success. Question twoFrom the case study, the Roberts Auto Sales and Services RASAS operates four major divisions of their company which initially started as a Ford dealership that owner, Vicky Roberts inherited from her father and decided to expand the business. The three business sections include;

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