Praxis Business School

PGP I: POM2 – Production and Operations Management

Problems on Productivity

1. Find the productivity if four workers installed 720 square yards of carpet in 8 hours
2. Compute the productivity of a machine which produces 68 usable pieces in 2 hours
3. A wrapping paper company produced 2000 rolls of paper in a day. Standard price is Rs 10
per roll. Labour cost was Rs 1600, Material cost was Rs 500 and overhead cost was Rs 3200.
Determine the multi-factor (total) productivity
4. Indoswiss bank employs 3 loan officers, each working 8 hours per day. Each officer processes
an average of 5 loans per day. Bank’s payroll cost for the officers is Rs 41000 per day and
there is a daily overhead expense of Rs 25000. Compute (a) Labour Productivity (b)
Multifactor productivity using loans per thousand rupee cost as the measure
5. The same bank in 4 above considers buying a software for loan operations which will enable
the officers to process up to 8 loans per day. The overhead cost, including the software, is
now Rs 27500 per day. Compute the (a) New labor productivity, (b) Compute the new multi-
factor productivity in loans per thousand rupees ; (c) What is the percentage improvement
in labor productivity; (d) What is the percentage improvement in total productivity?
6. In a 1-year period, the Productive Components Corporation (known as PCCorp) has shipped
units worth $1,200,000 to its customers. It produced units worth $250,000 for finished
goods (FG) inventory. PCCorp has $50,000 of work-in-process (WIP) units. During the same
1-year period of time, PCCorp had a labor bill of $140,000. Its capital expenses for the year
are calculated to be $430,000. Materials were purchased costing $530,000. Energy expenses
were $225,000, and miscellaneous expenses were estimated to be $75,000. (a) Calculate the
MFP composed of labor and capital for units shipped plus finished goods for PCCorp; (b)
What is PCCorp’s total productivity?
7. In the above problem (6) 25% of the shipped goods and finished goods were returned as
defective. PCCorp spent additional $150,000 on rework, but the goods still lost 30% of their
initial value. Find out the productivity loss for PCCorp in the year.

Answers

1. 22.5 yards / person hour

2. 34 pieces / hour
3. 3.77
4. (a) 5 loans per personday OR .625 loans per personhour; (b) .23 loans per thousand rupee
5. (a) 8 loans per personday or 1 loan per personhour, (b) .35 loans per thousand rupee, (c)
60%, (d) 52%
6. (a) 2.54, (b) (1200k + 250k + 50k)/ (140k+430k+530k+225k+75k) = 1.07
7. Total Output = (1200000 – 300000 + 300000 x.7) + (250000 – 62500 + 62500 x .7) + 50000 =
$1391250
Total Input = 1400000 + 150000 = $1550000
Total Productivity = $1391250/$1550000 = .9
Productivity Loss = (1.07-.9)/1.07 = 16%
Problems on Throughput

1. Demand for Bicycles is 100 per week. The bicycle manufacturer works 1 shift a day, 8 hour
per shift and 5 days per week. What Throughput Rate and Throughput Time is needed to
fulfill the demand?

2. In a sandwich shop every order goes through the following steps which are performed by 4
different persons:

(a) For a typical 8 hour workday with continuous flow of orders, what would be the
maximum output of this process?
(b) If we have to add one person, where should we add and how will it increase the
maximum output?
(c) How could we increase the throughput rate without adding a new person?

3. The process flow of a Dentist Chamber is shown below. Cleaning and examining X-Ray can
happen simultaneously.

a. Which is the bottleneck activity

b. What is the process capacity per hour (Throughput Rate)?
c. What is the Throughput Time?
d. How many hygienists (per who cleans teeth) should the doctor employ to remove the
bottleneck?

4. A bakery has two process steps – Bread Making and Packaging. The Bakery operates at batch
sizes of 100 (i.e. 100 loaves are either baked or packed together by the machines. Bread
Making machine processes one batch in 1 hour where as the Packing Machine packs one
batch in ¾ hour.
(a) Draw the two step process with a buffer stock in between. What is the maximum stock
built up in the buffer? What is the throughput rate if machines run all day? Which process is
the bottleneck?
(b) Improve the process by adding one machine of either kind and draw the process diagram
again. Which is the bottleneck now? How much time the machines should run per day so
that there is no inventory carried over after 24 hours (i.e. next day). What is the maximum
inventory built up between the machines in a day?
 5. The following represents a process to assemble a chair with an upholstered seat. Stations A,
B, C make the seats; Stations J, K, L assemble the chair frame; Station X combines the two
sub-assembly and some final tasks are performed in stations Y and Z. One worker is assigned
to each of the stations. Generally there is no inventory kept anywhere in the system, but
there is room for 1 unit between each of the stations that might be used for a brief amount
of time.

Following is the amount of work needed by each station (in minutes):

A – 38, B – 34, C – 35, J – 32, K – 30, L – 34, X – 22, Y – 18, Z – 20

a. What is the possible daily output of this “process” if 8 hours of processing time is available
each day?
b. What is the Throughput Rate?
c. What is the Throughput Time of the process?
d. Given the output, what is the efficiency (in terms of utilization) of the whole process?
e. What is the average WIP of the process?

6. Super50 coaching center processes 1000 applications per month. 50% of the applications are
screened and rejected in the first stage. 50% applicants are put in an advanced stage for testing and
the test results are handed over to them and the end of the process. On an average 200 participants
are in the preliminary stage and 150 in the advanced stage.
(a) Calculate how long does an applicant spent in the preliminary stage and final stage of the
process.
(b) How long it takes for a rejected and a selected student to hear their results.
(c) How long is the average application process time
Answers

1. Capacity to be created is = 100 bicycles per week

Time available to the manufacturer = 5 x 8 = 40 hours per week

Throughput Rate = 100 bicycles per week or 2.5 bicycle per hour

Throughput Time = 60 / 2.5 = 24 mins

2. (a) Slowest activity is the 3rd activity, which can handle maximum (8 * 60) / 4 = 120 orders in
8 hours. Therefore 120 is the maximum order that can be handled
(b) Add one in the 3rd activity. So this can be now done in 2mins. The slowest activity is now
Activity 2. Therefore maximum orders that can be handled in (8 * 60) / 3 = 160 orders
(c) Person on Activity 4 could be moved to activity 3 and activity 4 can be assigned to the
person taking the order

3. Bottleneck is the “Cleaning Teeth” Activity which takes 24 minutes per patient

Hourly Capacity or Throughput Rate is 60 / 24 = 2.5 patients per hour

Throughput Time = Longest Path = 2+2+4+24+8+6 = 46 minutes

Dentist can add 3 hygienists to bring down the “Cleaning Teeth” activity to 8 mins per
patient and remove the bottleneck

4. See the two diagrams below:

(a) Diagram A shows the simple two step process with a buffer. The first machine (breadmaking) is
the bottleneck. Inventory is zero at any time. Total time taken to produce 100 loaves is 1 hour + ¾
hour, i.e. 1 hour 45 mins (105 mins). If both machines run for 24 hours shift, then throughput =>
2400 loaves in 24*60+45 = 1485 mins or 1.6 breads per minute ( 97 breads per hour)
(b) In order to improve the throughput, two breadmaking machines can be used in parallel. They
make 200 bread loaves per hour. The second machine packs the first 100 loaves in 45 mins and the
next 100 loaves in 90 mins … and so on. Inventory gets built up very hour. In 24 hours, the packing
machine can pack 3200 loaves. Therefore each bread making machines must run for 1600/100 = 16
hours. Through-put rate is 3200 loaves in 1485 mins or 2.15 breads per min or 129 breads per hour.

Inventory built-up can be calculated as follows:

In the first 16 hours, the two bread making machines will produce 3200 breads. The packing
machine will start only after 1 hour. And it will pack 15 x 60 / 45 *100 = 2000 breads. Therefore the
maximum inventory built-up is 1200 loaves.

5. (a) Slowest Activity is A = 38 mins which is also the bottleneck.

Therefore possible daily output will be 8hours / 38 mins = 480/38 = 12.6 chairs per
day.

(b) Throughput Rate = 12.6 chairs per day or .02625 chairs per min

(c) Throughput Time = Longest Path = 38+34+35+22+18+20 = 167 mins

(d) Utilization is given by Total Task Time / Total Available Time

Total task time for all workstations = (38+34+35+32+30+34+22+18+20) = 263 mins
Total available time = 38 x 9 = 342 mins
Utilization = 263/342 = 77%

(e) WIP is given by Little’s formula: TR x TT = .02625 * 167 = 4.38 chairs

6. WIP in stage 1 is 200 and WIP in stage 2 is 150

Throughput Rate is 1000/month for the first stage and 500/month for the second stage

(a) This is given by the throughput time of the two stages.

Throughput Time is given by WIP / TR

Time spent by students in Stage 1 is (200/1000) = .2 month or 6 days

Time spent by students in Stage 2 is (150/500) = .3 month or 9 days

(b) A rejected student gets to hear the result in 6 days whereas a selected student gets
the test result in 15 days.

(c) Average application process time = 6*.5 + 9*.5 = 7.5 days