, SOLUTION MANUAL FOR
Operations and Supply Chain Management, 15th edition Heizer
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
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editions.
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will gladly replace it with the correct version.
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, 1
C H A P T E R
Operations and Productivity
DISCUSSION QUESTIONS
1. The text suggests four reasons to study OM. We want to understand (1) how people organize themselves for productive enterprise,
(2) how goods and services are produced, (3) what operations managers do, and (4) this costly part of our economy and most
enterprises.
LO 1.1: Define operations management
AACSB: Application of knowledge
2. With some 40% of all jobs being in the OM field, the career opportunities are prolific. The text suggests many career opportunities. OM
students find initial jobs throughout the OM field, including supply chain, logistics, purchasing, production planning and scheduling, plant
layout, maintenance, quality control, inventory management, etc.
LO 1.3: Identify career opportunities in operations management
AACSB: Application of knowledge
3. Possible responses include: Adam Smith (work specialization/ division of labor), Charles Babbage (work specialization/division of labor),
Frederick W. Taylor (scientific management), Walter Shewart (statistical sampling and quality control), Henry Ford (moving assembly
line), Charles Sorensen (moving assembly line), Frank and Lillian Gilbreth (motion study), and Eli Whitney (standardization).
LO 1.1: Define operations management
AACSB: Application of knowledge
4. See references in the answer to Question 3.
LO 1.1: Define operations management
AACSB: Application of knowledge
5. The actual charts will differ, depending on the specific organization the student chooses to describe. The important thing is for
students to recognize that all organizations require, to a greater or lesser extent, (a) the three primary functions of operations,
finance/accounting, and marketing; and (b) that the emphasis or detailed breakdown of these functions is dependent on the specific
competitive strategy employed by the firm.
LO 1.1: Define operations management
AACSB: Application of knowledge
6. The basic functions of a firm are marketing, accounting/ finance, and operations. An interesting class discussion: “Do all firms/organizations
(private, government, not-for-profit) perform these three functions?” The authors’ hypothesis is yes, they do.
LO 1.1: Define operations management
AACSB: Application of knowledge
Copyright © 2026 Pearson Education, Inc. 1
,2 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
7. The 10 strategic decisions of operations management are product design, quality, process, location, layout, human resources, supply chain
management, inventory, scheduling (intermediate and short-term), and maintenance. We find this structure an excellent way to help students
organize and learn the material.
LO 1.1: Define operations management
AACSB: Application of knowledge
8. The 10 decisions as applied to Amazon: (1) Product design—defining the product may initiate an interesting discussion. Is the product
the over 12 million products available, or is the product the ease of order entry, convenience, and home delivery? Probably both.
(2) Quality management—quality is built into every aspect of the Amazon culture, from item and order identification, and from the
supplier through receipt, process design, human resource training, inventory tracking, etc. Multiple checks of items are standard.
Errors in order receipts or shipment are very expensive. (3) Process strategy—receipt, movement to storage, and pulling of product for
shipment are all state of the art. Amazon’s process mimics in many ways an assembly line … where the workers stand still and the
product is brought to the worker, rather than movement of personnel up and down aisles to “pull” merchandise. (4) Location
strategy—Amazon’s facilities are strategically located worldwide to facilitate rapid delivery. (5) Layout strategy—facilities are
designed and redesigned to meet the changing state-of-the-art innovations, from Kivas (moving storage bins) to “pull to light.” (6)
Human resources—a non-union workforce has allowed continuing innovation in job design, work assignments, flexible short-term
and long-term (seasonal) work schedules, and benefits. (7) Supply chain management—volume has given Amazon substantial
negotiating flexibility. Amazon has also been willing to design and produce its own “copycat” products when it seems advantageous.
(8) Inventory management—sophisticated item receipt and storage over multiple facilities, along with customer order tracking that
facilitates shipment of orders from multiple locations to ensure complete orders, gives Amazon a huge advantage. (9) Scheduling—the
combination of inventory management, superior software, and a great process allows Amazon to ship in 15 minutes … the time from
the customer’s keyboard order click to shipment is 15 minutes. (10) Maintenance—the facility maintenance is rather simple as
factories go … it is complex, but they are not making rockets either. However, the software for customer order entry, Kiva control,
inventory, and order management—over multiple facilities—is complex and requires ongoing development, backups, and updating.
LO 1.1: Define operations management
AACSB: Application of knowledge
9. Four areas that are important to improving labor productivity are (1) basic education (basic reading and math skills), (2) diet of the labor
force, (3) social overhead that makes labor available (water, sanitation, transportation, etc.), and (4) maintaining and expanding the skills
necessary for changing technology and knowledge, as well as for teamwork and motivation.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Application of knowledge
10. Productivity is harder to measure when the task becomes more intellectual. A knowledge society implies that work is more intellectual
and therefore harder to measure. Because the U.S. and many other countries are increasingly “knowledge” societies, productivity is
harder to measure. Using labor-hours as a measure of productivity for a postindustrial society versus an industrial or agriculture
society is very different. For example, decades spent developing a marvelous new drug or winning a very difficult legal case on
intellectual property rights may be significant for postindustrial societies, but not show much in the way of productivity improvement
measured in labor-hours.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
11. Productivity is difficult to measure because precise units of measure may be lacking, quality may not be consistent, and exogenous
variables may change.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Reflective thinking
12. Mass customization is the flexibility to produce to meet specific customer demands, without sacrificing the low cost of a product-oriented
process. Rapid product development is a source of competitive advantage. Both rely on agility within the organization.
LO 1.1: Define operations management
AACSB: Application of knowledge
Copyright © 2026 Pearson Education, Inc.
, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 3
13. Labor productivity in the service sector is hard to improve because (1) many services are labor intensive and (2) they are individually
(personally) processed (the customer is paying for that service—the haircut), (3) it may be an intellectual task performed by
professionals,
(4) it is often difficult to mechanize and automate, and (5) it is often difficult to evaluate for quality.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Reflective thinking
14. Taco Bell designed meals that were easy to prepare; with actual cooking and food preparation done elsewhere; automation to save
preparation time; reduced floor space; manager training to increase span of control.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Application of knowledge
15. Bureau of Labor Statistics (stats.bls.gov) is a good place to start. Results will vary for each year, but overall data for the economy will
range from 0.9% to 4.8%, and mfg. could be as high as 5% and services between 1% and 2%. The data will vary even more for months
or quarters. The data are frequently revised, often substantially.
LO 1.7: Compute multifactor productivity
AACSB: Application of knowledge
Ethical Dilemma
AMERICAN CAR BATTERY INDUSTRY
You may want to begin the discussion by asking how ethical it is for you to be in the lead battery business when you know that any batteries
you recycle will very likely find their way to an overseas facility (probably Mexico) with, at best, marginal pollution containment. Then after a
likely conclusion of “Well someone has to provide batteries,” you can move to the following discussion.
(a) As owner of an independent auto repair shop trying to dispose of a few old batteries each week, your options may be limited. But as
an ethical operator, your first option is to put pressure on your battery supplier to take your old batteries. Alternatively, shop for a
battery supplier who wants your business enough to dispose of your old batteries. Third, because there is obviously a market for the
lead in old batteries, some aggressive digging may uncover an imaginative recycler who can work out an economical arrangement for
pickup or delivery of your old batteries. Another option is, of course, to discontinue the sale of batteries. (This is a problem for many
small businesses; ethical decisions and regulation may be such that they often place an expensive and disproportionate burden on a
small firm.)
(b) As manager of a large retailer responsible for disposal of thousands of used batteries each week, you should have little trouble finding
a battery supplier with a reverse supply chain suitable for disposal of old batteries. Indeed, a sophisticated retailer, early on in any
supply-chain development process, includes responsible disposal of environmentally dangerous material as part of the negotiations.
Disposal of old batteries should be a minor issue for a large retailer. For both a small and large retailer, the solution is to find a
“sustainable” solution or get out of the battery business. Burying the batteries behind the store is not an option.
Note: Supplement 5: Sustainability in the Supply Chain provides some guidelines for a deeper class discussion.
END-OF-CHAPTER PROBLEMS
120 boxes
1.1 (a) = 3.0 boxes/hour
40 hours
125 boxes
(b) = 3.125 boxes/hour
40 hours
(c) Change in productivity = 0.125 box/hour
0.125 box
(d) Percentage change = = 4.167%
3.0
Copyright © 2026 Pearson Education, Inc.
,4 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
1.2 (a) Labor productivity is 160 valves/80 hours = 2 valves per hour
(b) New labor productivity = 180 valves/80 hours = 2.25 valves per hour
(c) Percentage change in productivity = .25 valve/2 valves = 12.5%
1.3 57,600 , where L = number of laborers employed at the plant
0.15 =
(160 )(12 )( L )
57,600
So, L = = 200 laborers employed
(160)(12)(0.15)
Units produced 100 pkgs
1.4 (a) = = 20 pkgs/hour
Input 5
133 pkgs
(b) = 26.6 pkgs per hour
5
6.6
(c) Increase in productivity = = 33.0%
20
1.5
Resource Last Year This Year Change Percentage Change
Labor 1,000 1,000 0.31 0.31
= 3.33 = 3.64 = 9.3%
300 275 3.33
Resin 1,000 1,000 2.22 2.22
= 20 = 22.22 = 11.1%
50 45 20
Capital 1,000 1,000 −0.01
= 0.1 = 0.09 –0.01 = −10.0%
10,000 11,000 0.1
Energy 1,000 1,000 0.02
= 0.33 = 0.35 0.02 = 6.1%
3,000 2,850 0.33
1.6
Last Year This Year
Production 1,000 1,000
Labor-hour @ $10 $3,000 $2,750
Resin @ $5 250 225
Capital cost/month 100 110
Energy 1,500 1,425
$4,850 $4,510
[(1,,510) − (1,,850)]
=
(1,,850)
0.222 − 0.206 0.016
= = 7.8% improvement*
0.206 0.206
*With rounding to 3 decimal places.
Copyright © 2026 Pearson Education, Inc.
, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 5
Output
1.17 Productivity =
Input
65 65
(a) Labor productivity = =
(520 × 13) $6,760
= .0096 rug per labor $
65
(b) Multifactor =
productivity (520 × $13) + (100 × $5) + (20 × $50)
65
= = .00787 rug per $
$8, 260
1.8 (a) Labor productivity = 1,000 tires/400 hours = 2.5 tires/hour.
(b) Multifactor productivity is 1,000 tires/(400 × $12.50 + 20,000 × $1 + $5,000 + $10,000) = 1,000 tires/$40,000 = 0.025
tire/dollar.
(c) Multifactor productivity changes from 1,000/40,000 to 1,000/39,000, or from 0.025 to 0.02564; the ratio is 1.0256, so the change
is a 2.56% increase.
1.9
Last Year This Year Change Percentage Change
Labor hours 1,500 1,500 0.33 = 7.7%
= 4.29 = 4.62
350 325 4.29
Capital invested 1,500 1,500 − 0.02 = –20%
= 0.10 = 0.08
15,000 18,000 0.1
Energy (btu) 1,500 1,500 0.05 = 10%
= 0.50 = 0.55
3,000 2,750 0.50
Productivity of capital did drop; labor productivity increased as did energy, but by less than the anticipated 15%.
1.10 Multifactor productivity is:
375 autos/[($20 × 10,000) + ($1,000 × 500) + ($3 × 100,000)] = 375/(200,000 + 500,000 +300,000) = 375/1,000,000
= .000375 auto per dollar of inputs
1.11 (a) Before: 500/20 = 25 boxes per hour;
After: 650/24 = 27.08
(b) 27.08/25
= 1.083, or an increase of 8.3% in productivity
(c) New labor productivity = 700/24 = 29.167
boxes per hour
Copyright © 2026 Pearson Education, Inc.
,6 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
1.12 1,500 × 1.25 = 1,875 (new demand)
Outputs
= Productivity
Inputs
1,875
= 2.344
Labor-hours
1,875
New process = ≅ 800 labor-hours
2.344
800
= 5 workers
160
1,500
Current process = = 2.344
Labor-hours
1,500
= labor-hours ≅ 640
2.344
640
= 4 workers
160
Add one worker.
1.13 (a) Labor change:
1,500 1,500
= = .293 loaf/$
(640 × $8) 5,120
1,875
= 0.293 loaf/$
(800 × $8)
(b) Investment change:
1,500 1,500
= = .293 loaf/$
(640 × $8) 5,120
1,875 1,875
= = .359 loaf/$
(640 × 8) + (100) 5,220
.293 – .293
(c) Percentage change : = 0 (labor)
.293
.359 – .293
Percentage change : = .225
.293
= 22.5% (investment)
The better option is to purchase a new blender because it generates more loaves per dollar.
1,500
1.14 Old process =
(640 × 8) + 500 + (1,500 × 0.35)
1,500
= = 0.244 loaf/$
6,145
1,875
New process =
(800 × 8) + 500 + (1,875 × 0.35)
1,875
= = 0.248 loaf/$
7,556.25
0.248 – 0.244
Percentage change = = 1.6%
0.244
6,600 vans
1.15 (a) = 0.10
x labor-hours
x = 66,000 labor-hours
There are 300 laborers. So,
Copyright © 2026 Pearson Education, Inc.
, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 7
60,000 labor-hours 200 labor-hours/laborer
=
300 laborers on average, per month
(b) Now 6,600 vans
= 0.11 , so x = 60,000 labor-hours
x labor-hours
60,000 labor-hours 200 labor-hours/laborer
so, =
300 laborers on average, per month
$ output 52 ( $90 ) + 80 ( $198 )
1.16 =
Labor-hours 8 ( 45 )
$20,520
= = $57.00 per labor-hour
360
1,500
1.17 (a) Last year =
(350 × 8) + (15,000 × 0.0083) + (3,000 × 0.6)
1,500
=
2,800 + 124.50 + 1,800
1,500
= = 0.317 doz / $
4,724.5
1500
(b) This year =
(325 × 8) + (18,000 × 0.0083) + (2,750 × 0.6)
= 0.341 doz / $
0.341 − 0.317
(c) Percentage change =
0.317
= 0.076, or 7.6% increase
CASE STUDY
UBER TECHNOLOGIES, INC.
1. First, some drivers (maybe most) may not require a wage that equals those fully engaged in the “taxi” business. It truly could be a
supplemental income. . . “I’m going that way anyhow so let’s make a few dollars while on the way.” Similarly, the capital investment
cost approaches zero as the car is going that direction anyhow. These are idle or underutilized resources.
From society’s perspective, Uber and its like competitors are desirable because both idle or wasted labor and capital resources are
being utilized. At the same time, as a bonus, Uber is reducing traffic and auto pollution while speeding up the transport of individuals
and local commerce.
As a competitor for the traditional taxi service, Uber seems to be an enhancement in efficiency.
For those faculty who what to spend some time on the larger productivity message, this case provides such an opportunity. Uber,
as Joseph Schumpeter would suggest, has developed a disruptive technology (creative destruction, in a Schumpeterian translation).
Innovations such as this are exactly how economic efficiency is enhanced. The traditional taxi services, with some imagination, could
have developed and adopted this technology, but most were ensconced in their own regulatory cocoon. As is often the case, it takes an
outsider, such as Uber et al. to be creative by putting unused resources to use and providing society with greater efficiency.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
Copyright © 2026 Pearson Education, Inc.
, 8 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
2. Perhaps a business model similar to Uber’s can be applied to the trucking industry. And, indeed, Uber has established an Uber app for the
trucking industry. An estimated 30% of trucking backhauls are empty. However, the number of truckers with the latitude to alter their route
is limited. Moreover, this number is a tiny fraction of independent automobile drivers. So, the ability to “Uberize” trucking may prove
difficult, but utilizing that idle 30% would be huge benefit to society. Variations of the Uber model utilize apps that identify requests for
pickup and delivery services that allow independent truckers to identify and negotiate loads that make their routes and hence society’s
resources more efficient.
Additionally, innovations of the Uber model can be used for tracking bus and train schedules and ticket purchases, as well as package
delivery and documentation, for everything from flowers to groceries. Airbnb (www.airbnb.com) is applying a similar model to short-term
rentals of rooms, apartments, and homes—competing with more traditional bed-and-breakfast facilities and hotels. All of these make use of
under-utilized resources.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
3. Many of the disadvantages of the Uber model are slowly being overcome. However, a major ongoing disadvantage is the proliferation
of regulations, with some countries and airports even banning ride-sharing companies. Additionally, some jurisdictions seek to treat
drivers as employees rather than independent contractors. This is a significant issue as the Uber business model does not hire drivers.
This and related liability disputes are still being defined. The driver and car availability issue is compounded by the need to have
enough drivers on hand when needed, notably holidays and late at night. Another major issue is Uber’s very extensive, sophisticated,
necessarily complex, and fast software network with its inherent vulnerabilities, from “bugs” to network downtime and hacks.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
VIDEO CASE STUDIES
1 FRITO-LAY: OPERATIONS MANAGEMENT IN MANUFACTURING
This case provides a great opportunity for an instructor to stimulate a class discussion early in the course about the pervasiveness of the 10
decisions of OM with this case alone or in conjunction with the Hard Rock Cafe case. There is a short video (7 minutes) available in MyLab
Operations Management that is filmed specifically for this text and supplements this case.
1.
Product design: Each of Frito-Lay’s 40-plus products must be conceived, formulated (designed), tested (market studies, focus
groups, etc.), and evaluated for profitability.
Quality: The standards for each ingredient, including its purity and quality, must be determined.
Process: The process that is necessary to produce the product and the tolerance that must be maintained for each ingredient by each
piece of equipment must be specified and procured.
Location: The fixed and variable costs of the facility, as well as the transportation costs and the delivery distance, given the
freshness, must be determined.
Layout: The Frito-Lay facility would be a process facility, with great care given to reducing movement of material within the
facility.
Human resources: Machine operators may not have inherently enriched jobs, so special consideration must be given to developing
empowerment and enriched jobs.
Supply chain management: Frito-Lay, like all other producers of food products, must focus on developing and auditing raw material
from the farm to delivery.
Inventory: Freshness and spoilage require constant effort to drive down inventories.
Scheduling: The demand for high utilization of a capital-intensive facility means effective scheduling will be important.
Maintenance: High utilization requires good maintenance, from machine operator to the maintenance department and depot service.
LO 1.1: Define operations management
AACSB: Reflective thinking
Copyright © 2026 Pearson Education, Inc.
Operations and Supply Chain Management, 15th edition Heizer
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
Purchase Guarantee
If you believe you have purchased the wrong file, don’t worry. Contact us anytime and we
will gladly replace it with the correct version.
Contact Email:
, 1
C H A P T E R
Operations and Productivity
DISCUSSION QUESTIONS
1. The text suggests four reasons to study OM. We want to understand (1) how people organize themselves for productive enterprise,
(2) how goods and services are produced, (3) what operations managers do, and (4) this costly part of our economy and most
enterprises.
LO 1.1: Define operations management
AACSB: Application of knowledge
2. With some 40% of all jobs being in the OM field, the career opportunities are prolific. The text suggests many career opportunities. OM
students find initial jobs throughout the OM field, including supply chain, logistics, purchasing, production planning and scheduling, plant
layout, maintenance, quality control, inventory management, etc.
LO 1.3: Identify career opportunities in operations management
AACSB: Application of knowledge
3. Possible responses include: Adam Smith (work specialization/ division of labor), Charles Babbage (work specialization/division of labor),
Frederick W. Taylor (scientific management), Walter Shewart (statistical sampling and quality control), Henry Ford (moving assembly
line), Charles Sorensen (moving assembly line), Frank and Lillian Gilbreth (motion study), and Eli Whitney (standardization).
LO 1.1: Define operations management
AACSB: Application of knowledge
4. See references in the answer to Question 3.
LO 1.1: Define operations management
AACSB: Application of knowledge
5. The actual charts will differ, depending on the specific organization the student chooses to describe. The important thing is for
students to recognize that all organizations require, to a greater or lesser extent, (a) the three primary functions of operations,
finance/accounting, and marketing; and (b) that the emphasis or detailed breakdown of these functions is dependent on the specific
competitive strategy employed by the firm.
LO 1.1: Define operations management
AACSB: Application of knowledge
6. The basic functions of a firm are marketing, accounting/ finance, and operations. An interesting class discussion: “Do all firms/organizations
(private, government, not-for-profit) perform these three functions?” The authors’ hypothesis is yes, they do.
LO 1.1: Define operations management
AACSB: Application of knowledge
Copyright © 2026 Pearson Education, Inc. 1
,2 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
7. The 10 strategic decisions of operations management are product design, quality, process, location, layout, human resources, supply chain
management, inventory, scheduling (intermediate and short-term), and maintenance. We find this structure an excellent way to help students
organize and learn the material.
LO 1.1: Define operations management
AACSB: Application of knowledge
8. The 10 decisions as applied to Amazon: (1) Product design—defining the product may initiate an interesting discussion. Is the product
the over 12 million products available, or is the product the ease of order entry, convenience, and home delivery? Probably both.
(2) Quality management—quality is built into every aspect of the Amazon culture, from item and order identification, and from the
supplier through receipt, process design, human resource training, inventory tracking, etc. Multiple checks of items are standard.
Errors in order receipts or shipment are very expensive. (3) Process strategy—receipt, movement to storage, and pulling of product for
shipment are all state of the art. Amazon’s process mimics in many ways an assembly line … where the workers stand still and the
product is brought to the worker, rather than movement of personnel up and down aisles to “pull” merchandise. (4) Location
strategy—Amazon’s facilities are strategically located worldwide to facilitate rapid delivery. (5) Layout strategy—facilities are
designed and redesigned to meet the changing state-of-the-art innovations, from Kivas (moving storage bins) to “pull to light.” (6)
Human resources—a non-union workforce has allowed continuing innovation in job design, work assignments, flexible short-term
and long-term (seasonal) work schedules, and benefits. (7) Supply chain management—volume has given Amazon substantial
negotiating flexibility. Amazon has also been willing to design and produce its own “copycat” products when it seems advantageous.
(8) Inventory management—sophisticated item receipt and storage over multiple facilities, along with customer order tracking that
facilitates shipment of orders from multiple locations to ensure complete orders, gives Amazon a huge advantage. (9) Scheduling—the
combination of inventory management, superior software, and a great process allows Amazon to ship in 15 minutes … the time from
the customer’s keyboard order click to shipment is 15 minutes. (10) Maintenance—the facility maintenance is rather simple as
factories go … it is complex, but they are not making rockets either. However, the software for customer order entry, Kiva control,
inventory, and order management—over multiple facilities—is complex and requires ongoing development, backups, and updating.
LO 1.1: Define operations management
AACSB: Application of knowledge
9. Four areas that are important to improving labor productivity are (1) basic education (basic reading and math skills), (2) diet of the labor
force, (3) social overhead that makes labor available (water, sanitation, transportation, etc.), and (4) maintaining and expanding the skills
necessary for changing technology and knowledge, as well as for teamwork and motivation.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Application of knowledge
10. Productivity is harder to measure when the task becomes more intellectual. A knowledge society implies that work is more intellectual
and therefore harder to measure. Because the U.S. and many other countries are increasingly “knowledge” societies, productivity is
harder to measure. Using labor-hours as a measure of productivity for a postindustrial society versus an industrial or agriculture
society is very different. For example, decades spent developing a marvelous new drug or winning a very difficult legal case on
intellectual property rights may be significant for postindustrial societies, but not show much in the way of productivity improvement
measured in labor-hours.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
11. Productivity is difficult to measure because precise units of measure may be lacking, quality may not be consistent, and exogenous
variables may change.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Reflective thinking
12. Mass customization is the flexibility to produce to meet specific customer demands, without sacrificing the low cost of a product-oriented
process. Rapid product development is a source of competitive advantage. Both rely on agility within the organization.
LO 1.1: Define operations management
AACSB: Application of knowledge
Copyright © 2026 Pearson Education, Inc.
, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 3
13. Labor productivity in the service sector is hard to improve because (1) many services are labor intensive and (2) they are individually
(personally) processed (the customer is paying for that service—the haircut), (3) it may be an intellectual task performed by
professionals,
(4) it is often difficult to mechanize and automate, and (5) it is often difficult to evaluate for quality.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Reflective thinking
14. Taco Bell designed meals that were easy to prepare; with actual cooking and food preparation done elsewhere; automation to save
preparation time; reduced floor space; manager training to increase span of control.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Application of knowledge
15. Bureau of Labor Statistics (stats.bls.gov) is a good place to start. Results will vary for each year, but overall data for the economy will
range from 0.9% to 4.8%, and mfg. could be as high as 5% and services between 1% and 2%. The data will vary even more for months
or quarters. The data are frequently revised, often substantially.
LO 1.7: Compute multifactor productivity
AACSB: Application of knowledge
Ethical Dilemma
AMERICAN CAR BATTERY INDUSTRY
You may want to begin the discussion by asking how ethical it is for you to be in the lead battery business when you know that any batteries
you recycle will very likely find their way to an overseas facility (probably Mexico) with, at best, marginal pollution containment. Then after a
likely conclusion of “Well someone has to provide batteries,” you can move to the following discussion.
(a) As owner of an independent auto repair shop trying to dispose of a few old batteries each week, your options may be limited. But as
an ethical operator, your first option is to put pressure on your battery supplier to take your old batteries. Alternatively, shop for a
battery supplier who wants your business enough to dispose of your old batteries. Third, because there is obviously a market for the
lead in old batteries, some aggressive digging may uncover an imaginative recycler who can work out an economical arrangement for
pickup or delivery of your old batteries. Another option is, of course, to discontinue the sale of batteries. (This is a problem for many
small businesses; ethical decisions and regulation may be such that they often place an expensive and disproportionate burden on a
small firm.)
(b) As manager of a large retailer responsible for disposal of thousands of used batteries each week, you should have little trouble finding
a battery supplier with a reverse supply chain suitable for disposal of old batteries. Indeed, a sophisticated retailer, early on in any
supply-chain development process, includes responsible disposal of environmentally dangerous material as part of the negotiations.
Disposal of old batteries should be a minor issue for a large retailer. For both a small and large retailer, the solution is to find a
“sustainable” solution or get out of the battery business. Burying the batteries behind the store is not an option.
Note: Supplement 5: Sustainability in the Supply Chain provides some guidelines for a deeper class discussion.
END-OF-CHAPTER PROBLEMS
120 boxes
1.1 (a) = 3.0 boxes/hour
40 hours
125 boxes
(b) = 3.125 boxes/hour
40 hours
(c) Change in productivity = 0.125 box/hour
0.125 box
(d) Percentage change = = 4.167%
3.0
Copyright © 2026 Pearson Education, Inc.
,4 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
1.2 (a) Labor productivity is 160 valves/80 hours = 2 valves per hour
(b) New labor productivity = 180 valves/80 hours = 2.25 valves per hour
(c) Percentage change in productivity = .25 valve/2 valves = 12.5%
1.3 57,600 , where L = number of laborers employed at the plant
0.15 =
(160 )(12 )( L )
57,600
So, L = = 200 laborers employed
(160)(12)(0.15)
Units produced 100 pkgs
1.4 (a) = = 20 pkgs/hour
Input 5
133 pkgs
(b) = 26.6 pkgs per hour
5
6.6
(c) Increase in productivity = = 33.0%
20
1.5
Resource Last Year This Year Change Percentage Change
Labor 1,000 1,000 0.31 0.31
= 3.33 = 3.64 = 9.3%
300 275 3.33
Resin 1,000 1,000 2.22 2.22
= 20 = 22.22 = 11.1%
50 45 20
Capital 1,000 1,000 −0.01
= 0.1 = 0.09 –0.01 = −10.0%
10,000 11,000 0.1
Energy 1,000 1,000 0.02
= 0.33 = 0.35 0.02 = 6.1%
3,000 2,850 0.33
1.6
Last Year This Year
Production 1,000 1,000
Labor-hour @ $10 $3,000 $2,750
Resin @ $5 250 225
Capital cost/month 100 110
Energy 1,500 1,425
$4,850 $4,510
[(1,,510) − (1,,850)]
=
(1,,850)
0.222 − 0.206 0.016
= = 7.8% improvement*
0.206 0.206
*With rounding to 3 decimal places.
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, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 5
Output
1.17 Productivity =
Input
65 65
(a) Labor productivity = =
(520 × 13) $6,760
= .0096 rug per labor $
65
(b) Multifactor =
productivity (520 × $13) + (100 × $5) + (20 × $50)
65
= = .00787 rug per $
$8, 260
1.8 (a) Labor productivity = 1,000 tires/400 hours = 2.5 tires/hour.
(b) Multifactor productivity is 1,000 tires/(400 × $12.50 + 20,000 × $1 + $5,000 + $10,000) = 1,000 tires/$40,000 = 0.025
tire/dollar.
(c) Multifactor productivity changes from 1,000/40,000 to 1,000/39,000, or from 0.025 to 0.02564; the ratio is 1.0256, so the change
is a 2.56% increase.
1.9
Last Year This Year Change Percentage Change
Labor hours 1,500 1,500 0.33 = 7.7%
= 4.29 = 4.62
350 325 4.29
Capital invested 1,500 1,500 − 0.02 = –20%
= 0.10 = 0.08
15,000 18,000 0.1
Energy (btu) 1,500 1,500 0.05 = 10%
= 0.50 = 0.55
3,000 2,750 0.50
Productivity of capital did drop; labor productivity increased as did energy, but by less than the anticipated 15%.
1.10 Multifactor productivity is:
375 autos/[($20 × 10,000) + ($1,000 × 500) + ($3 × 100,000)] = 375/(200,000 + 500,000 +300,000) = 375/1,000,000
= .000375 auto per dollar of inputs
1.11 (a) Before: 500/20 = 25 boxes per hour;
After: 650/24 = 27.08
(b) 27.08/25
= 1.083, or an increase of 8.3% in productivity
(c) New labor productivity = 700/24 = 29.167
boxes per hour
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,6 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
1.12 1,500 × 1.25 = 1,875 (new demand)
Outputs
= Productivity
Inputs
1,875
= 2.344
Labor-hours
1,875
New process = ≅ 800 labor-hours
2.344
800
= 5 workers
160
1,500
Current process = = 2.344
Labor-hours
1,500
= labor-hours ≅ 640
2.344
640
= 4 workers
160
Add one worker.
1.13 (a) Labor change:
1,500 1,500
= = .293 loaf/$
(640 × $8) 5,120
1,875
= 0.293 loaf/$
(800 × $8)
(b) Investment change:
1,500 1,500
= = .293 loaf/$
(640 × $8) 5,120
1,875 1,875
= = .359 loaf/$
(640 × 8) + (100) 5,220
.293 – .293
(c) Percentage change : = 0 (labor)
.293
.359 – .293
Percentage change : = .225
.293
= 22.5% (investment)
The better option is to purchase a new blender because it generates more loaves per dollar.
1,500
1.14 Old process =
(640 × 8) + 500 + (1,500 × 0.35)
1,500
= = 0.244 loaf/$
6,145
1,875
New process =
(800 × 8) + 500 + (1,875 × 0.35)
1,875
= = 0.248 loaf/$
7,556.25
0.248 – 0.244
Percentage change = = 1.6%
0.244
6,600 vans
1.15 (a) = 0.10
x labor-hours
x = 66,000 labor-hours
There are 300 laborers. So,
Copyright © 2026 Pearson Education, Inc.
, CHAPTER 1 O P E R A T I O N S AND PRODUCTIVITY 7
60,000 labor-hours 200 labor-hours/laborer
=
300 laborers on average, per month
(b) Now 6,600 vans
= 0.11 , so x = 60,000 labor-hours
x labor-hours
60,000 labor-hours 200 labor-hours/laborer
so, =
300 laborers on average, per month
$ output 52 ( $90 ) + 80 ( $198 )
1.16 =
Labor-hours 8 ( 45 )
$20,520
= = $57.00 per labor-hour
360
1,500
1.17 (a) Last year =
(350 × 8) + (15,000 × 0.0083) + (3,000 × 0.6)
1,500
=
2,800 + 124.50 + 1,800
1,500
= = 0.317 doz / $
4,724.5
1500
(b) This year =
(325 × 8) + (18,000 × 0.0083) + (2,750 × 0.6)
= 0.341 doz / $
0.341 − 0.317
(c) Percentage change =
0.317
= 0.076, or 7.6% increase
CASE STUDY
UBER TECHNOLOGIES, INC.
1. First, some drivers (maybe most) may not require a wage that equals those fully engaged in the “taxi” business. It truly could be a
supplemental income. . . “I’m going that way anyhow so let’s make a few dollars while on the way.” Similarly, the capital investment
cost approaches zero as the car is going that direction anyhow. These are idle or underutilized resources.
From society’s perspective, Uber and its like competitors are desirable because both idle or wasted labor and capital resources are
being utilized. At the same time, as a bonus, Uber is reducing traffic and auto pollution while speeding up the transport of individuals
and local commerce.
As a competitor for the traditional taxi service, Uber seems to be an enhancement in efficiency.
For those faculty who what to spend some time on the larger productivity message, this case provides such an opportunity. Uber,
as Joseph Schumpeter would suggest, has developed a disruptive technology (creative destruction, in a Schumpeterian translation).
Innovations such as this are exactly how economic efficiency is enhanced. The traditional taxi services, with some imagination, could
have developed and adopted this technology, but most were ensconced in their own regulatory cocoon. As is often the case, it takes an
outsider, such as Uber et al. to be creative by putting unused resources to use and providing society with greater efficiency.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
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, 8 CHAPTER 1 OPERATIONS AND PRODUCTIVITY
2. Perhaps a business model similar to Uber’s can be applied to the trucking industry. And, indeed, Uber has established an Uber app for the
trucking industry. An estimated 30% of trucking backhauls are empty. However, the number of truckers with the latitude to alter their route
is limited. Moreover, this number is a tiny fraction of independent automobile drivers. So, the ability to “Uberize” trucking may prove
difficult, but utilizing that idle 30% would be huge benefit to society. Variations of the Uber model utilize apps that identify requests for
pickup and delivery services that allow independent truckers to identify and negotiate loads that make their routes and hence society’s
resources more efficient.
Additionally, innovations of the Uber model can be used for tracking bus and train schedules and ticket purchases, as well as package
delivery and documentation, for everything from flowers to groceries. Airbnb (www.airbnb.com) is applying a similar model to short-term
rentals of rooms, apartments, and homes—competing with more traditional bed-and-breakfast facilities and hotels. All of these make use of
under-utilized resources.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
3. Many of the disadvantages of the Uber model are slowly being overcome. However, a major ongoing disadvantage is the proliferation
of regulations, with some countries and airports even banning ride-sharing companies. Additionally, some jurisdictions seek to treat
drivers as employees rather than independent contractors. This is a significant issue as the Uber business model does not hire drivers.
This and related liability disputes are still being defined. The driver and car availability issue is compounded by the need to have
enough drivers on hand when needed, notably holidays and late at night. Another major issue is Uber’s very extensive, sophisticated,
necessarily complex, and fast software network with its inherent vulnerabilities, from “bugs” to network downtime and hacks.
LO 1.8: Identify the critical variables in enhancing productivity
AACSB: Analytical thinking
VIDEO CASE STUDIES
1 FRITO-LAY: OPERATIONS MANAGEMENT IN MANUFACTURING
This case provides a great opportunity for an instructor to stimulate a class discussion early in the course about the pervasiveness of the 10
decisions of OM with this case alone or in conjunction with the Hard Rock Cafe case. There is a short video (7 minutes) available in MyLab
Operations Management that is filmed specifically for this text and supplements this case.
1.
Product design: Each of Frito-Lay’s 40-plus products must be conceived, formulated (designed), tested (market studies, focus
groups, etc.), and evaluated for profitability.
Quality: The standards for each ingredient, including its purity and quality, must be determined.
Process: The process that is necessary to produce the product and the tolerance that must be maintained for each ingredient by each
piece of equipment must be specified and procured.
Location: The fixed and variable costs of the facility, as well as the transportation costs and the delivery distance, given the
freshness, must be determined.
Layout: The Frito-Lay facility would be a process facility, with great care given to reducing movement of material within the
facility.
Human resources: Machine operators may not have inherently enriched jobs, so special consideration must be given to developing
empowerment and enriched jobs.
Supply chain management: Frito-Lay, like all other producers of food products, must focus on developing and auditing raw material
from the farm to delivery.
Inventory: Freshness and spoilage require constant effort to drive down inventories.
Scheduling: The demand for high utilization of a capital-intensive facility means effective scheduling will be important.
Maintenance: High utilization requires good maintenance, from machine operator to the maintenance department and depot service.
LO 1.1: Define operations management
AACSB: Reflective thinking
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