# Operation Mangment – Math Problem Example

Question 1a)Calculate the labour productivity (in £ per hour) and multifactorproductivity ratio (of output value to input value) for a month’smanufacture. Answer: i). X is the number of workers in the factory 160/30=5.3 hrs is the average hours per worker per day Average pay per hour = 14/y Labour of productivity per day= 5.3hrs x 14/x=74.2/x Labour of productivity per hours= 74.2/8x =9.275/x per person (assuming 8 hours makes 1 day)ii). Multifactor Productivity ratio=output/input values output values=100 x 450= £45,000 input values= 21000+2240/xMultifactor Productivity Ratio=45,000/[21,000+ 2240/x]b)After some study, Nick is considering three options to improve the multifactor productivity ratio. The option that has the greatest impact on Nick’s multifactor productivity measure is when labour, material and overhead cost is reduced by 10 per cent.

This way it will have positive impact on the multifactor productivity ratio. In addition, revenue for the company will increase as a result of that. Increasing the sales pice by 10 per cent will have minimal impact but not as compared to reducing the labour, material and overhead cost. Similar to improving quality so that only 15 per cent of the finished product are defective.

c)Use this example to discuss the significance of Operations Management to this (or any) business. You are likely to draw on all concepts studiedin this module so far. Operations management refers to the operation, design and control of manufacturing process that converts such resources as raw materials and labour into finished goods or services that are sold to the end users. If Nick want his company to be successful, he should recognize the importance role that operations management will play as part of the overall organizational strategiy to maintain and establish its global leadership.

In Nick’s situations, operational management wplays in successuful company performance can be seen as the company moves towards managing its operations from a value chain which will mean the whole series of activities that add value at each step that will begin the process of raw materials and ending with the finished goods. Operational management is important in efficiently and effectivel y managing the productivity as Nick’s company should have high productivity which can lead to development and economic growth as well as lead to increase in company’s profits without causing inflation.

Operational management will also place an important role in competitive success of the company. Question 2a)Highlight Competitive Priorities aspects (Cost; Quality; Time; andFlexibility) of the new business activity. The competitive priority is a way in which a business will compete in the new market. Quality focuses on how well the sport cars will be made and how they will adheres to the designed specifications. Therefore, the sport cars that will be sold will be of high quality that are close to the specified speed, has right capacity and attractive looks.

Flexibility will play a vital role since manufacturing technology is fast changing and is seen to be cost effective for the business. The business will invest in a system which can easily adapt to new customer needs instead of having to purchase a new manufacturing system. Time delivery of a finished product is the ability of a manufacturing company to deliver according to the promise schedule. A company ability to deliver its product more quickly than its rival is important.

A company is not only required to deliver on products/services but maintain the same for after sale services. Therefore, sport cars will be deliverd within shortest time after customers have made order. Cost or price: cost or price is an important consideration for customers because differences between lower priced cars and higher priced cars do not seem justified. Therefore the the company should keep its manufacturing costs down so that the company can be able to offer “good” price for its customer and still make a profit