The document contains 6 problems related to calculating productivity and break-even analysis in operations management.
Problem 1 calculates the productivity of 3 employees producing policies and a team producing units. Problem 2 calculates the productivity of 2 shifts producing proposals and policies.
Problem 3 calculates the productivity and labor productivity ratio of a 3-credit course. Problem 4 calculates the productivity per week for a process based on units produced, labor, material and overhead costs.
Problems 5 and 6 continue calculating productivity and labor productivity ratios in various scenarios. The document then shifts to calculating break-even points and total contribution to profit in 4 problems with various cost and sales data.
Finally, a preference matrix problem calculates scores for a new product
Capacity Management in Airline Industry- A Case StudyAyat A. Saleh
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The purpose of this case study is to analyse the capacity management in three airline companies, and to identify a set of critical success factors in this area. The companies are: Royal Jordanian Airline, American Airliners and Easy Jet. The first two companies were selected as examples for 'full-service carrier', while the last one was selected as an example for 'low-cost carrier'. This case study was submitted as a part of the 'Logistics and Operations Management' course in the University of Warwick, United Kingdom, 2016. For more details, you can check this blog post: https://ayatsaleh.com/2017/01/10/how-yield-management-is-implemented-in-airline-industry/
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The purpose of this case study is to analyse the capacity management in three airline companies, and to identify a set of critical success factors in this area. The companies are: Royal Jordanian Airline, American Airliners and Easy Jet. The first two companies were selected as examples for 'full-service carrier', while the last one was selected as an example for 'low-cost carrier'. This case study was submitted as a part of the 'Logistics and Operations Management' course in the University of Warwick, United Kingdom, 2016. For more details, you can check this blog post: https://ayatsaleh.com/2017/01/10/how-yield-management-is-implemented-in-airline-industry/
The overhead cost chapter in a business or accounting context typically deals with expenses that are incurred in the operation of a business but cannot be directly attributed to specific products or services.
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Interview Questions and Tips for Local Government Department Sindh by Seetal ...Seetal Daas
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These interview tips and questions are prepared for Municipal Officer, Town Officer and Assistant Accounts Officer in Local Government Department Sindh
These OMR Sheet according to your order for conducting any test is available at reasonable rates for further queries contact the email address: seetal.daas@gmail.com.
For the board examination, detailed notes of Asan Sindhi with MCQs, short and long answers, I hope it will facilitate you in preparation for your examination.
English solved paper prepared for student's benefit, it is very much beneficial for students of 9th class for board examination purpose. Download and share with your friends and schools.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
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This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
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Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
This presentation provides an introduction to quantitative trait loci (QTL) analysis and marker-assisted selection (MAS) in plant breeding. The presentation begins by explaining the type of quantitative traits. The process of QTL analysis, including the use of molecular genetic markers and statistical methods, is discussed. Practical examples demonstrating the power of MAS are provided, such as its use in improving crop traits in plant breeding programs. Overall, this presentation offers a comprehensive overview of these important genomics-based approaches that are transforming modern agriculture.
Solid waste management & Types of Basic civil Engineering notes by DJ Sir.pptxDenish Jangid
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Solid waste management & Types of Basic civil Engineering notes by DJ Sir
Types of SWM
Liquid wastes
Gaseous wastes
Solid wastes.
CLASSIFICATION OF SOLID WASTE:
Based on their sources of origin
Based on physical nature
SYSTEMS FOR SOLID WASTE MANAGEMENT:
METHODS FOR DISPOSAL OF THE SOLID WASTE:
OPEN DUMPS:
LANDFILLS:
Sanitary landfills
COMPOSTING
Different stages of composting
VERMICOMPOSTING:
Vermicomposting process:
Encapsulation:
Incineration
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Refuse
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Recycle
Reduce
FACTORS AFFECTING SOLID WASTE MANAGEMENT:
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This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Basic Civil Engineering Notes of Chapter-6, Topic- Ecosystem, Biodiversity Green house effect & Hydrological cycle
Types of Ecosystem
(1) Natural Ecosystem
(2) Artificial Ecosystem
component of ecosystem
Biotic Components
Abiotic Components
Producers
Consumers
Decomposers
Functions of Ecosystem
Types of Biodiversity
Genetic Biodiversity
Species Biodiversity
Ecological Biodiversity
Importance of Biodiversity
Hydrological Cycle
Green House Effect
Extraction Of Natural Dye From Beetroot (Beta Vulgaris) And Preparation Of He...SachinKumar945617
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If you want to make , ppt, dissertation/research, project or any document edit service
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The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
1. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
1 Operation and Production Management
FINDING PRODUCTIVITY
Problem#1:
a- 3 employees produce 6 hundred insurance policies in a week. They work 8 hours per
day, 5 days per week.
b- A team of workers makes 4 hundred units of product which is valued by it standard cost
of $10 each, the accounting department reports that for this job the actual cost are $400
per labor, $1000 for material cost and $300 for overheads.
Solution
a- Data: Employees=3
Working hours=8
Days=5
No.of Policies=600
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
600
3Γ8Γ5
=
600
120
= 5 ππππππππ πππ βππ’π.
b- Data:No. of Units=400
Standard Cost=$10
Labor cost=$400
Material Cost=$1000
Overhead=$300
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
ππππ‘π Γπππ π‘ ππ π’πππ‘π
πΏ.πΆ+π.πΆ+ππ»πΆ
=
400Γ10
400+1000+300
=
4000
1700
= 2.35
Problem#2:
BBA-III students are going to commence a new project in Badin City. The appointed members
are working in 2 consecutive shifts Mr. Adeel and Seetal work in morning shift 3 hours daily
and 4 day per week and producing 700 Research Proposal, while Mr.Ilamdin and Vikio work in
evening shift to produce 800 insurance policies. They work 7 hours per day and 4 days per
week. The estimated worth of their overhead proposals is 700 by the people of Badin. Calculate
the Productivity.
Data
Shift-1: hours=3.days=4=12
Output=700
Shift-2: hours=7.days=4=28
Output=800
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
700+800
12+28
=
1500
40
= 37.5
2. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
2 Operation and Production Management
Problem#3:
Students tuition at a university is $100 per semester credit hour. The state supplement school
revenue by matching student tuition dollar for dollar. Average cost size for a typical 3 credit
course is 50 students. Labor cost $4000 per class, material cost is $20 per student per class,
overhead cost is $25000 per class.
A-Calculate productivity b-if instructor works an average of 14 hours per week for 16 weeks
for each 3 credit class of 50 students, what is labor productivity ratio?
Solution:
Data
Student fees=$100
State supplement=$100
No.of students=50
Credit hours=3
Labor cost=$4000
Material cost=20/student
Overhead cost=$2500
A--P=
ππ’ππ’π‘
πΌπππ’π‘
=
50Γ3Γ100+100
4000+20(50)+25000
=
150Γ200
5000+25000
=
30000
30000
= 1
B--Productivity Ratio=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
30000
14Γ16
=
30000
224
=133.92 per hours.
Problem# 4:
The output of a process is valued at 100 units. The cost of labor is $50 per hour including
benefits. The accounting department provided the following information about the process for
past four week.
Week 1 Week 2 Week 3 Week 4
Units produced 1124 1310 1092 981
Labor Cost $ 12735 14842 10602 9526
Material Cost $ 21041 25523 20442 18364
Overhead Cost $ 8992 10480 8732 7848
Solution:
Productivity Week 1=
ππ’π‘ππ’π‘
ππππ’π‘
=
ππππ‘π πππππ’πππΓ100
πΏ.πΆ+π.πΆ+π.π»
=
1124Γ100
12735+21041+8992
=
112400
42768
= 2.628
Productivity Week 2=
ππ’π‘ππ’π‘
ππππ’π‘
=
ππππ‘π πππππ’πππΓ100
πΏ.πΆ+π.πΆ+π.π»
=
1310Γ100
14842+25523+10480
=
131000
50845
= 2.576
3. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
3 Operation and Production Management
Productivity Week 3=
ππ’π‘ππ’π‘
ππππ’π‘
=
ππππ‘π πππππ’πππΓ100
πΏ.πΆ+π.πΆ+π.π»
=
1092Γ100
10602+20442+8732
=
98100
39776
= 2.745
Productivity Week 4=
ππ’π‘ππ’π‘
ππππ’π‘
=
ππππ‘π πππππ’πππΓ100
πΏ.πΆ+π.πΆ+π.π»
=
981Γ100
9526+18364+7848
=
98100
35738
= 2.744
Problem#5:
A- Data
Season Ticket Price: 192$
Overhead Cost: 25000$
Students:75
Labor Cost:6500$
Credit Course/hours: 3
Students fees: 200$
State support: 100$
Material Cost: 25$/student
Solution;
Productivity:
ππ’π‘ππ’π‘
ππππ’π‘
=
75Γ3Γ100+200+192
6500+25(75)+25000
=
110700
33375
= 3.316
B- Labor Productivity (20 hours/week for 16 weeks for each three-credit class of 75)
Labor Productivity=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
110700
20Γ16
=
110700
320
= 345.94/hours
Problem 6:
Data
Hours: 40/week
Standard Cost:120 each
Units Produced: 2500
Employees:70
Hours:72/week
Units Produced: 4000
Standard Cost:144 each
Solution;
a- Productivity:
2500Γ120
40Γ70
=
3,00,000
2800
= 107.14 Ans.
b- Labor Productivity Ratio:
4000Γ144
72Γ70
=
576000
5040
= 114.28/βππ’ππ Ans.
4. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
4 Operation and Production Management
BREAKEVEN
Problem#1:
A hospital considering a new product to be offered at $200 per patient; the fixed cost per year
would be $1 lac and total variable cost is $100 per patient. What is the Breakeven quantity, what
will be total contribution to the profits?
Data
Fixed cost=100,000
Price=$200
Variable cost=$100
No.of Patient=1500
A-Breakeven quantity?
B-Total Contribution to the Profit(TCP)?
Solution:
A--B.E=
πΉππ₯ππ πππ π‘
πππππβππππππππ πΆππ π‘
=
100,000
200β100
=
100,000
100
= 1000 Ans.
B--TCP=RevenueβExpenses=ππ β (πΉ + ππ)=200Γ1500β(100000 + 100 Γ 1500)
TCP=300,000β100,000 β150,000=300,000β250,000=50,000 Ans.
Problem#2:
Data Solution:
A-Variable Cost=6 A--B.E=
πΉππ₯ππ πππ π‘
πππππβπ£πππππππ πππ π‘
=
60000
18β6
=
60000
12
= 5000 Ans.
Fixed Cost=60000
Price=18
B.E=?
B-Sales=10000 BβTCP=PQβ(F+VQ)=14(10000)β{60000+6Γ 10000}
Price=14 TCP=140,000β120,000=20,000 Ans.
TCP=?
C-Sales=15000 C1βTCP=PQβ(F+VQ)=14(15000)β{60000 + 6 Γ 15000}
1-Price=14 TCP=210,000β(60000+90000)=210,000β150,000=60,000 Ans.
2-Price=12.50 C2βTCP=PQβ(F+VQ)=12.50(15000)β{60000+6Γ15000}
TCP=? TCP=187500β(60000+90000)=187500β150,000=37500 Ans.
5. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
5 Operation and Production Management
Problem#3:
Data
Q=17500
Selling Cost=22
Variable Cost=18
Fixed Cost=80,000
AβB.E?
BβWhich alternative yield the more profit.1βV=85% reduce or 2βS=30% increase.
Solution:
AβB.E=
πΉ
πβππΆ
=
80,000
22β18
=
80,000
4
=20,000 Ans.
BβBy calculating the profits alternative 1.
TPM=PQβ(F+VQ)=22(17500)β(80,000+2.7Γ17500)=38,5000β(80,000+47250)
TPM=38,5000β80,000β47,250=38,5000β127,250=2,57,750 Ans.
By calculating the profit of alternative 2.
TPM= PQβ(F+VQ)=22(17,500) β(80,000+18Γ22,750)
TPM=500500β80,000β40,9500=500500β489500=11,000
Answer:A1ΛA2
Management will decide to reduce cost by 85% because it yield more.
Problem#4:
Data
Fixed Cost=$10600
Variable Cost=$1.60 per year
Quantity Sold=800
Price?
Solution:
Driving formula for getting Price formula.
Q=
πΉ
πβπ
=ΛQ(P-V)=F =Λ QP-QV=F =Λ P=
ππβπΉ
π
=Λ We get this equation P=
πβπΉ
π
P=
1.60β10600
800
=13.25 Answer.
6. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
6 Operation and Production Management
Problem#5:
Process 1-Data
Fixed Cost=$30,000
Variable Cost=$600
Process 2-Data
Fixed Cost=$120,000
Variable Cost=$900
Difference in Total Cost?
Solution:
Process 1-
TC=F+VQ=30,000+600(800)
TC1=30,000+480,000=780,000
Process 2-
TC=F+VQ=120,000+900(800) =120,000+720,000
TC2=840,000
Difference in Total Cost
TC=TC2βTC1=840000β780000=60000 Ans.
Problem#6: Solution
DataβCase 1: TPM=PQβ(F+VQ)
Variable Cost=$5 TPM=10(30000)β(140000+5Γ30000)
Fixed Cost=$14,0000 TPM=300,000β140000β150000=300,000β290,000
Price=$10 TPM=10,000 Ans.
Q=30000
TPM=?
DataβCase 2: TPM=PQβ(F+VQ)
Variable Cost=5+1=$6 TPM=11(50,000) β (60,000+6Γ50,000)
Fixed Cost=$60,000 TPM=550,000β60,000β300,000
Price=$10+1=$11 TPM=550,000β360,000
Q=50,000 TPM=190,000 Ans.
TPM=?
7. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
7 Operation and Production Management
PREFERENCE MATRIX
Problem#1:
The table below shows the performance criteria, weight and score (1 from worst and 10 from
best) for a new product; thermal storage conditioner. If the management want to introduce just
one new product at highest total score of any other product ideas is 800, should the firms pursue
making air conditioner?
Performance Criteria A-Weight B-Score
Material Potential 30 8
Unit Profit Margin 20 10
Operation Compatibility 20 6
Competitive advantages 15 10
Investment Requirement 10 2
Profit Risk 5 4
Solution:
Weight Average
240+200+120+150+20+20=750
The company would go and launch because it has more weight score than AC. Therefore, BΛA.
Possible Future Demand
Rows are called=Alternatives and Columns are called=Events
Alternatives Low High
Small Facility 200 270
Large Facility 160 800
Do nothing 0 0
A-MaximinβAn alternative worst payoff/lower number in row of payoff matrix, he is pessimist
so takes negative views.
Alternative Payoff
Small Facility 200
Large Facility 160
B-MaximaxβHe sees optimist so sees things in positive view.
Alternative Payoff
Small Facility 270
Large Facility 800
C-Laplaceβit is calculated through 1/n.(n=no of rows)
Small Facility (0.5)200=100 + (0.5)270=135 = 235
Large Facility (0.5)160=80 + (0.5)800=400 = 480
D-Minimax Regretβ it is calculated by given payoff minus best payoff.
Alternative Low High Max
Small Facility 200β200=0 800β270=530 530
Large Facility 200β160=40 800β800=0 40
8. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
8 Operation and Production Management
HOMEWORK
PRODUCTIVITY RATIO
Problem #1:
Coach Bajourn Toulouse led the Big Red Herrings to several disappointing football seasons.
Only better recruiting will return the Big Red Herring to winning from. Because of the current
state of the programmers Boehning University fan are unlikely to support increases in the 192
season ticket price. Improved recruitment will increase overhead costs to 30,000 per class
section from the current 25,000 per class section. The universityβs budget plan is to cover
recruitment costs by increasing the average class size to 75 students. Labor costs will increase to
6,500 per three credit course, tuition will be 200 per semester credit, which is matched by state
support of 100 per semester credit.
a-find out the Productivity Ratio?
Solution:
Data
Ticket Price=120
Increase O.H=30,000
Current O.H=25,000
Students=75
Labor Cost=6500 per three credit course
Material Cost=25 per student
Tuition=200 per semester credit
State Support=100 per semester credit
Credit hours=3
P==
ππ’π‘ππ’π‘
πΌπππ’π‘
=
75Γ3(200+100)
6500+(25Γ75)+30,000
=
225Γ300
6500+1875+30,000
=
67500
38375
= 1.75
b-If Instructor work an average of 20 hours per week for 16 weeks for each three-credit class of
75 students, what is the Labor Productivity?
Solution
L.P==
ππ’π‘ππ’π‘
πΌπππ’π‘
=
67500
20Γ16
= 210.93
9. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
9 Operation and Production Management
Problem #2:
Compact Disc players are produced on an automated assembly line process. The standard cost of
Compact disc player is 150 per unit, (labor cost=30, material cost=70 and overhead cost=50).
The sales price is 300 per unit.
a-To achieve a 10% multifactor productivity improvement by reducing materials cost only, by
what percentage must those costs be reduced?
Solution
Data: Standard cost=150
Labor Cost=30
Material Cost=70
Overhead Cost=50
Sales Price=300
P==
ππ’π‘ππ’π‘
πΌπππ’π‘
=
300
30+70+50
= 2
β’ For 10% productivity improvement
β’ Multiplying=2Γ0.2=2.2, then dividing 300/2.2=136 and 300/2=150
β’ The cost of input must be deceased by: 150 ΜΆ 136=14
β’ 14 reductions in material cost= 14/70=0.2=20%
β’ To improve 10% productivity 20% material cost will be reduced.
b-To achieve a 10% multifactor productivity improvement by reducing labor costs only, by what
percentage must those costs be reduced?
Solution
M.P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
300
30+70+50
= 2
β’ For 10% productivity improvement
β’ Multiplying=2Γ0.2=2.2, then dividing 300/2.2=136 and 300/2=150
β’ The cost of input must be deceased by: 150 ΜΆ 136=14
β’ 14 reductions in labor cost= 14/30=0.46=46%
β’ To improve 10% productivity, 46% labor cost will be reduced.
c-To achieve a 10% multifactor productivity improvement by reducing overhead cost only, by
what percentage must those costs be reduced?
Solution
M.P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
300
30+70+50
= 2
β’ For 10% productivity improvement
β’ Multiplying=2Γ0.2=2.2, then dividing 300/2.2=136 and 300/2=150
10. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
10 Operation and Production Management
β’ The cost of input must be deceased by: 150 ΜΆ 136=14
β’ 14 reductions in overhead cost= 14/50=0.28=28%
β’ To improve productivity 10%, 28% overhead cost will be reduced.
Problem #3:
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.
W1 W2 W3 W4
Unit Produced 1,124 1310 1,042 981
Labor Cost 12,735 14,842 10,603 9,526
Material Cost 21,041 24,523 20,442 18,364
Overhead 8,992 10,480 8,736 7,848
a-Use the multifactor productivity ratio use to see whether recent process improvements bad any
effect and, if so, when the effect was noticeable.
Solution
Data: Process of valued: 100 per unit
Labor Cost=850 per hour
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W1=
1124Γ100
47768
=
112400
47768
= 2.35
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W2=
1310Γ100
50845
=
131000
50845
= 2.57
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W3=
1092Γ100
10603+20442+8736
=
109200
39781
= 2.75
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W4=
981Γ100
19210
=
98100
19210
= 5.11
b-Has labor productivity changed? Use the labor productivity ratio to support your answer.
Solution (data same as above)
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W1=
112400
850
= 132.235
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W2=
13,1000
850
= 154.117
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W3=
109200
850
= 128.470
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=W4=
98100
850
= 115.41
Problem #4:
The Big Black Bird Company (BBBC), has a large order for special plastic-lined military
uniform to be used in an urgent military operation. Working the normal two shifts of 40 hours,
11. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
11 Operation and Production Management
the BBBC production process usually produces 2500 uniforms per week at a standard cost of
120 each. 70 employees work the first shift and 30 in second. The contract price is 200 per
uniform because of the urgent need, BBBC is authorized to use around-the-clock production, 6
days per week. When each of the two shifts works 72 hours per week, production increases to
4000 uniforms per week but at a cost of 144 each.
Did the productivity ratio increase, decrease or remain the same? If it changed, by what
percentage did it change?
Solution
Data: Working Hours=40
Produce=2500 per week
S.C=120 each
Employees=70+30=100
Contract price= 200 per each
Day per week=6
Produce=4000 per week
S.C=144
First Process
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
2500Γ120
40(100)
=
300,000
4000
= 75
Second Process
P=
ππ’π‘ππ’π‘
πΌπππ’π‘
=
4000Γ144
7200
=
676000
7200
= 80
75(100)/80=6.25
Productivity Ratio Increases=6.25%
b-Did the labor productivity ratio increase, decrease or remain the same? If it changed, by what
percentage did it change?
Solution
First Process
Labor Productivity=
2500
4000
= 0.625=6.25
Second Process
Labor Productivity=
4000
7200
= 0.555=5.55
5.55(100)/6.25=11.2
Labor Productivity decrease=11.2%
12. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
12 Operation and Production Management
C-Did weekly profit increase, decrease or remain the same?
Solution
First Process
Profit=
200Γ2500
4000
= 125
Problem #05:
Natallia Attire makes fashionable garments. During a particular week employees worked 360
hours to produce a batch of 132 garments of which 52 were seconds (meaning that they were
flawed). Seconds are sold for 90 each at Attireβs factory outlet store. The remaining 80 garments
are sold to retail distribution, at 200 each. What is the labor productivity ratio of this
manufacturing process?
Solution
Data: Produce=132
Working hours=360
First sell=52 per 90 each
Second sell=80 per 200 each
Labor Productivity=
(52Γ90)+(80Γ200)
360
=
20680
360
= 57.44
BREAKEVEN ANALYSIS
Problem #1:
Mary William, owner of Willians products, is evaluating. Whether to introduce a new product
line. After thinking through the production process and the cost of raw materials and new
equipment, Willians estimates the variable costs of each unit produced and sold at 6 and the
fixed cost per year at 60,000.
a-if the selling price is set at 18 each, how many units must be produced and sold for Willians to
breakeven? Use both graphic and algebraic approaches to get your answers.
Solution
Data: Variable Cost=6per unit
Fixed Cost=60,000 per year
Selling Price=18 each
Breakeven=
πΉ
π ΜΆ π
=
60,000
18β6
= 5000
b-Willians forecasts sales of 10,000 units for the first year if the selling price is set at 14 each.
What would be the total contribution to profits from this new product during the fiscal year?
13. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
13 Operation and Production Management
Data
Variable Cost=6
Fixed Cost=60,000
Selling Price=14 each
Sales=10,000 units
TCP=PQ ΜΆ (F+VQ)=14Γ10,000 ΜΆ {60,000+6(10,000)}
TCP=140,000 ΜΆ 60,000 ΜΆ 60,000=20,000
c-if the selling price is at 1250, Willians forecasts that first year sales would, increase to 15,000
units which pricing strategy 14 or 12.50 would result in the greater total contribution to profit?
Solution
Data
Variable Cost=6
Fixed Cost=60,000
Selling Price=14 or 12.50
Units=15,000
a-TCP=PQ ΜΆ (F+VQ)
TCP=14(15000) ΜΆ {60,000+6(15,000)} =210,000 ΜΆ 60,000 ΜΆ 90,000=210,000 ΜΆ 150,000=60,000
b-TCP=PQ ΜΆ (F+VQ)
TCP=12.50(15000) ΜΆ { 60,000+6(15,000)}=187,500 ΜΆ 150,000=37,500
Problem #02:
Solution (a)
Data:Q=17,500
Selling Cost=22 per unit
Variable Cost=18 per unit
Fixed Cost=80,000
B.E=
πΉ
π ΜΆ π
=
80,000
22 ΜΆ 18
= 20,000
Solution (b)β85% reducing
A1=TCP=22(17500) ΜΆ {80,000+2.7(17500)}=38,5000 ΜΆ 80,000 ΜΆ 47,250=25,7750
A2=TCP=22(17500) ΜΆ {80,000+18(22750)}=500,500 ΜΆ 49500=11,000
A1ΛA2 : Management should decide to reduce cost by 85% because it yield more profit.
14. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
14 Operation and Production Management
Problem #03:
Data: Fixed Cost=10,600
Variable Cost=6.70
Q=800
Price=?
Solution
Q=
πΉ
π ΜΆ π
= Λ Q(P ΜΆ V)=F
QP-QV=F , P=QV+F/Q
P=V ΜΆ F/Q=6.70 ΜΆ 10,600/800=-6.55
Problem #4:
Data
Q=800 units
First Process
Fixed Cost=30,000
Variable Cost=600
Second Process
Fixed Cost=120,000
Variable Cost=900
Solution
TC1=F+VQ=30,000+600(800) =30,000+48,0000=780,000
Problem #05:
a-1:Data:Fixed Cost=140,000
Variable Cost=5 per unit
Selling Price=10 per unit
Q=30,000 units
Solution
TPM=PQ ΜΆ (F+VQ)
TPM= 10(30,000) ΜΆ {140,000+5(30,000)}=300,000 ΜΆ 140,000 ΜΆ 50,000
TPM=300,000 ΜΆ 290,000=10,000
15. 2k13/BBA Seetal Daas (seetal.daas@gmail.com) BBA-2k13
15 Operation and Production Management
a-2-Data: Fixed Cost=60,000
Variable Cost=5+1=6 per unit
Selling Price=10+1=11 per unit
Q=50,000 units
Solution
TPM=PQ ΜΆ (F+VQ)
TPM=11(50,000) ΜΆ {60,000+6(5,000)}=55,0000 ΜΆ 60,000 ΜΆ 300,000
TPM=55,0000 ΜΆ 360,000=190,000
Process Two
TC2= 120,000+900(800)=120,000+720,000=840,000
ΞTC=TC2 ΜΆ TC1= 840,000 ΜΆ 780,000=60,000
b-Data: Fixed Cost=200,000
Variable Cost=6 per unit
Selling Price=11 per unit
Q=45,000
Solution
TPM= PQ ΜΆ (F+VQ)
TPM= 11(45,000) ΜΆ {200,000+6(45,000)= 495,000 ΜΆ 470,000= 25,000
New equipment should implement because it yield more margin profit.