,Solution manual for Operations Management
Creating Value Along the Supply Chain, 2nd
Canadian Edition Roberta S. Russell
Hello all ,
We have all what you need with best price
Our email :
Our website :
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,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 1
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CHAPTER 1 – INTRODUCTION TO OPERATIONS AND SUPPLY CHAIN
MANAGEMENT
ANSWERS TO QUESTIONS, PROBLEMS, AND CASE PROBLEMS
Answers to Questions
1-1. The operations function involves organizing work, selecting processes, arranging layouts,
locating facilities, designing jobs, measuring performance, controlling quality, scheduling
work, managing inventory, and planning production. Operations interacts with marketing
in product development, forecasting, production planning, and customer service.
Operations and finance interact in capital budgeting, cost analysis, production and
inventory planning, and expansion and technology plans. Operations and human resources
work together recruiting, training and evaluating workers, designing jobs and working with
unions. IT and operations work together daily on e-commerce, enterprise resource planning
and supply chain management systems.
1-2. a. Operations at a bank involves transferring funds, processing funds, providing cheques,
cashing cheques, preparing monthly statements, reconciling statements, approving
loans, loaning money, keeping track of loan payments, approving credit cards, and
more.
b. Operations at a retail store involves purchasing goods, stocking goods, selling goods,
keeping track of inventory, scheduling workers, laying out the store, locating the store,
forecasting demand, and more.
c. Operations at a hospital involves preparing the rooms, scheduling doctors, nurses and
other workers, processing paperwork, ordering supplies, caring for patients, maintaining
the facility, laying out the facility, ensuring quality and more.
d. Operations at a cable TV company involves taking orders, installing equipment,
maintaining equipment, keeping the shows on the air, scheduling work, processing
statements and payments, and more.
1-3. Inventions during the industrial revolution brought workers together under one roof in a
factory setting where division of labour and interchangeable parts encouraged the
formation of separate worker and management jobs. Ideas from the scientific management
era made work more efficient. Human relations theorists emphasized the importance of the
human element in operations management. The management science era saw many
advances in quantitative techniques and their application. The quality revolution focused
management on meeting customer expectations and emphasized quality over quantity. The
Internet brought numerous opportunities to do work faster and better. It also opened doors
to new markets worldwide. Today’s successful companies compete worldwide for both
market access and production resources.
1-4. Productivity is the ratio of output to input. Output can be expressed as units produced,
customers served, calls answered, or sales dollars. Inputs include labour, materials, capital,
or square footage. Single-factor productivity measures the ratio of an output to a single
input. Multi-factor productivity relates output to a combination of inputs that are all
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 2
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expressed in the same units (e.g., labour cost + materials cost). Total factor productivity
computes the total quantity of goods and serviced produced with all of the inputs used to
produced them.
1-5. Student answers will vary. The information can be accessed directly from the Internet.
1-6. Student answers will vary.
1-7. Students can begin this assignment by accessing Fortune’s homepage and referring to the
Fortune 500 or Global 500 by industry. The leaders in each industry are listed and there is
usually some discussion of industry concerns. Individual data on companies can be found
at Hoover’s website (www.hoovers.com).
1-8. Student answers will vary.
1-9. Student answers will vary.
1-10. Student answers will vary. The information can be accessed directly from the Internet.
1-11. The WTO is an international organization that works to establish and enforce rules of trade
between nations. WTO agreements are ratified by the governing bodies of the nations
involved. WTO’s dispute settlement process interprets agreements and rules on violations,
thereby avoiding political or military conflict. The group promotes free trade and more
recently, has helped developing nations enter the trade arena on more equitable grounds.
Currently, there are 164 member nations. Membership is achieved by meeting certain
environmental, human rights, and trade criteria, agreeing to abide by the rules of the
organization, and being approved by two-thirds of the existing membership. See
www.wto.org
1-12. Student answers will vary. Access www.worldbusinessculture.com
1-13. Student answers will vary. Access www.transparency.org
1-14. Student answers will vary. Access http://laws-lois.justice.gc.ca/eng/acts/C-45.2/ for basic
information.
1-15. Students will find a variety of answers for this question. In general, it is easy to find
mission or vision statements, but more difficult to find evidence of the mission or vision
being applied.
1-16. Strategy formulation consists of four basic steps: (1) defining a primary task—what is the
purpose of the firm? What the firm is in the business of doing? (2) assessing core
competencies—what does a firm do better than anyone else? (3) determining order winners
and order qualifiers—what wins orders in the marketplace? What qualifies a product or
service to be considered for purchase? (4) positioning the firm—what one or two important
things should the firm choose to concentrate on? How should the firm compete in the
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
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marketplace?
Student answers will vary. Most start-ups try too much too soon. It’s difficult to stick with
what you do best.
1-17. Core competencies are the essential capabilities that create a firm’s sustainable competitive
advantage. They have usually been built up over time and cannot be easily imitated. For
example, First National Bank, one of our local banks, is known as a risk taker. Its core
competence is its ability to size up the potential of investment opportunities. Through its
familiarity with local businesses and its experience in loan making, the bank has developed
the ability to predict which loans are worth taking extra risks.
Walmart, a successful retail store, is known for having a wide assortment of items at
competitive prices. The store carries clothing, fresh food, toys, books, and sports
equipment, and offers services such as photo printing and pharmacy. They specialize in
low prices by managing their supply chain operations and inventory carefully.
Toyota emphasizes superior quality at a price below its competitors with its Lexus line of
automobiles. To establish a special reputation for quality over the lifetime of the car, the
company set up separate sales and service facilities. When it is time for servicing, Lexus
owners can have their vehicle picked up and delivered to their home or place of business.
The car returns the same day, washed and vacuumed, often with a gift certificate inside for
a night on the town complements of the dealer.
1-18. While the answers to this question vary considerably, most students feel competent in the
technical areas of their major, but uncomfortable with their communication skills (both oral
and written) and their ability to make decisions. This opens the way for more project-
oriented assignments from the instructor. The question also helps students prepare for the
inevitable interview question—what are your strengths and weaknesses?
1-19. Order qualifiers are characteristics of a product or service that qualify it to be considered
for purchase by a customer. An order winner is the characteristic of a product or service
that wins orders in the marketplace—the final factor in the purchasing decision.
When buying a simple product like coffee, students might use order qualifiers to narrow
down options (e.g. eliminating choices that are too expensive), the using an order winner to
make the decision (e.g. choosing the option that is closest, or with the shortest line).
1-20. a. Most companies approach quality in a defensive or reactive mode; quality is confined to
minimizing defect rates or conforming to design specifications. To compete on quality,
companies must view quality as an opportunity to please the customer, not just as a way
to avoid problems or to reduce rework costs. The manufacturer of Rolex watches
competes on quality.
b. Companies that compete on cost relentlessly pursue the elimination of all waste. The
entire cost structure is examined for reduction potential, not just direct labour costs.
High volume production and automation may or may not provide the most cost-
effective alternative. Wal-Mart competes on cost.
c. Flexibility includes the ability to produce a wide variety of products, to introduce new
products and to modify existing products quickly, and, in general, to respond to
customer needs. Steelcase Canada competes on flexibility.
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d. Competing on speed requires a new type of organization characterized by fast moves,
fast adaptations, and tight linkages. Citicorp competes on speed.
e. Competing on innovation requires taking risks and challenging the status quo.
Companies must also be prepared accept failure as part of the learning process. Google,
Apple, and 3M compete on innovation, as does SpaceX.
f. Competing on service requires closeness to the customer, availability of resources,
attention to detail, and flexible operations. Ritz-Carlton competes on service.
1-21. Operations can play two important roles in corporate strategy: (1) it can provide support
for the strategy of a firm (help with order qualifiers), and (2) it can serve as a firm’s
distinctive competence (win orders).
1-22. Strategic decisions in operations and supply chain management involve products and
services, processes and technology, capacity and facilities, human resources, quality,
sourcing, and operating systems.
1-23. Policy deployment tries to focus everyone in an organization on common goals and
priorities by translating corporate strategy into measurable objectives down through the
various functions and levels of the organization. As a result, everyone in the organization
should understand the strategic plan, be able to derive several goals from the plan, and
determine how each goal ties into their own daily activities.
1-24. The balanced scorecard examines a firm’s performance in four critical areas – its finances,
customers, processes, and capacity for learning and growing. Although operational
excellence is important in all four areas, the tools in operations are most closely associated
with process.
1-25. Student answers will vary.
1-26. Student answers will vary. The balanced scorecard worksheet in Table 1.3 is helpful.
Finances might refer to future income, customers to potential employers who are interested
in both grades and experience, processes to how students will raise their grades and gain
experience, and learning and growing to developing skills in several areas.
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
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Answers to Problems
(Answers may vary due to rounding)
1-1. The Kingston store is the most productive.
Store Hamilton Kingston London Waterloo
Sales volume $40,000 $12,000 $60,000 $25,000
Labour hours 250 60 500 200
Productivity $160 $200 $120 $125
1-2. a. London is the most productive ($8.33).
b. Based on productivity, the Kingston store should be closed. Other factors to consider
include total revenue, potential for growth, and options for reducing costs.
Hamilton Kingston London Waterloo
Sales volume $40,000 $12,000 $60,000 $25,000
Labour hours 250 60 500 200
Labour cost/hr $12.75 $12.50 $12.00 $11.50
Rent $1,800 $2,000 $1,200 $800
Productivity $8.02 $4.36 $8.33 $8.07
1-3. By number, Jim was more productive last year. By weight, Jim was more productive this
year.
Last yr This yr
Hours fishing 4 6
Bass caught 12 15
Average weight 20 25
Bass/hr 3 2.5
Avg Weight/hr 60 62.5
1-4. Productivity could be measured by total account dollars per hour worked, new account
dollars per hour worked, or existing account dollars per hour worked. Boisvert is the most
productive based on total output. Albert and Duong have the most new accounts, and thus
the greater potential returns in the future. However, Duong cannot work many more hours
a week and Boisvert is only working half time. Boisvert has the potential to sell more if he
works more hours.
Agents Albert Boisvert Cressey Duong
New accounts $100,000 $40,000 $80,000 $200,000
Existing accounts $40,000 $40,000 $150,000 $100,000
Labour hours 40 20 60 80
Total $/hr $3,500.00 $4,000.00 $3,833.33 $3,750.00
$ New accts/hr $2,500.00 $2,000.00 $1,333.33 $2,500.00
$ Existing accts/hr $1,000.00 $2,000.00 $2,500.00 $1,250.00
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1-5. Japan is the most productive.
Labour Hours Units of Output Productivity
Canada 79.2 87.1 1.10
Germany 89.6 103.6 1.16
Japan 86.3 117.6 1.36
1-6. Omar should probably close the plant in Guadalajara because its multifactor productivity is
the lowest, its labour productivity is the second lowest, and its output is the least of the four
plants.
Units (in 000’s) Montreal Frankfurt Guadalajara Bejiing
Finished goods 10,000 12,000 5,000 8,000
Work-in-process 1,000 2,200 3,000 6,000
Costs (in 000’s)
Labour costs $3,500 $4,200 $2,500 $800
Material costs $3,500 $3,000 $2,000 $2,500
Energy costs $1,000 $1,500 $1,200 $800
Transportation costs $250 $2,500 $2,000 $5,000
Overhead costs $1,200 $3,000 $2,500 $500
Labour productivity 3.14 3.38 3.20 17.50
Total productivity 1.16 1.00 0.78 1.46
1-7. Hill is the most productive in terms of rushing yards and touchdowns per carry. However,
Peressini has highest number of rushing yards and touchdowns. Using “carries” as the
input variable skews the results. Productivity is not always the best measure of
performance.
Candidates Hill Lévesque Peressini
Rushing yards 2,110 3,623 6,925
# Carries 105 875 1,186
# Touchdowns 15 20 70
Yards/carry 20.10 4.14 5.84
Touchdowns/carry 0.14 0.02 0.06
1-8. Productivity decreases from week to week.
Installation 1 2 3
Square Feet 11,025 12,915 22,500
# workers 4 3 5
# hours 3 5 6
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Square Feet/hr 918.75 861 750
1-9.
Centre 1 2 3 3c.
Pieces processed 1,000 2,000 3,000 5,000
Workers/hr 10 5 2 2
Hourly wage rate $20.50 $25 $27 $27
Overhead/hr $10 $25 $50 $80
Multifactor productivity 4.65 13.33 28.85 37.31
a. Work center # 3 is the most productive.
b. With a 10% raise in center 1, productivity goes down to 4.25 pieces per dollar spent.
c. With new equipment in center 3, productivity goes up to 37 pieces. Install the new
equipment.
1-10. Material productivity is stable over the 4 weeks. Labour productivity increases in week 2
and decreases in weeks 3 and 4.
Week 1 2 3 4
Units of output 2,000 4,000 5,000 7,000
# workers 4 4 5 6
Hours per week 40 48 56 70
Labour cost per hour $20 $20 $20 $20
Material (kgs.) 128 256 324 450
Material cost per kg $8 $8 $8 $8
Labour productivity [units/hr] 12.50 20.83 17.86 16.67
Labour productivity [units/$] 0.63 1.04 0.89 0.83
Material productivity [units/kg] 15.63 15.63 15.43 15.56
Material productivity [units/$] 1.95 1.95 1.93 1.94
Multifactor productivity [units/$] 0.47 0.68 0.61 0.58
1-11. Johan is the most productive.
Jake Jasbir Jennifer Johan
# ads sold 100 50 200 35
# hours spent 40 15 85 10
Output/hr 2.50 3.33 2.35 3.50
1-12. Choose Cold Case.
Alaskan Brr Cold Deep
Seal Frost Case Freeze
Purchase cost $3,270 $4,000 $4,452 $5,450
Daily energy consumption 3.61 3.88 6.68 29.07
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(kwh)
Cost per kwh $0.10 $0.10 $0.10 $0.10
Daily energy cost $0.36 $0.39 $0.67 $2.91
Daily purchase cost $2.99 $3.65 $4.07 $4.98
Total cost $3.35 $4.04 $4.73 $7.88
Volume (cu ft) 25 35 49 72
Productivity (cu ft/$) 7.47 8.66 10.35 9.14
Cost/cu ft $0.13 $0.12 $0.10 $0.11
1-13. Sweet Tooth should switch to the new process.
Current New process
process
Chocolate powder(kg) 100 200
Cocoa beans(kg) 1000 1800
Hours of processing 10 15
Cost of processing $25 $25
Cost of cocoa beans $6.80 $6.80
Labour productivity (kg/$) 0.4 0.53
Multi factor productivity (kg/$) 0.014 0.016
1-14.
Pairs of jeans 60
Workers 3
Machines 3
Hours/day 8
Labour hours / day 24
Raw material cost/ pair $10
Labour cost / hour $20
Energy cost/ hour of $1
machine time
Machine cost/ hour $10
Total energy cost $24
Total labour cost $480
Total machine cost $240
Total material cost $600
Total cost of producing $1344
60 pairs of jeans
Labour productivity 2.5
(jeans/hr)
Unit cost ($/jeans) 22.4
Multi-factor productivity 0.044643
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
Creating Value Along the Supply Chain, 2nd
Canadian Edition Roberta S. Russell
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 1
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
CHAPTER 1 – INTRODUCTION TO OPERATIONS AND SUPPLY CHAIN
MANAGEMENT
ANSWERS TO QUESTIONS, PROBLEMS, AND CASE PROBLEMS
Answers to Questions
1-1. The operations function involves organizing work, selecting processes, arranging layouts,
locating facilities, designing jobs, measuring performance, controlling quality, scheduling
work, managing inventory, and planning production. Operations interacts with marketing
in product development, forecasting, production planning, and customer service.
Operations and finance interact in capital budgeting, cost analysis, production and
inventory planning, and expansion and technology plans. Operations and human resources
work together recruiting, training and evaluating workers, designing jobs and working with
unions. IT and operations work together daily on e-commerce, enterprise resource planning
and supply chain management systems.
1-2. a. Operations at a bank involves transferring funds, processing funds, providing cheques,
cashing cheques, preparing monthly statements, reconciling statements, approving
loans, loaning money, keeping track of loan payments, approving credit cards, and
more.
b. Operations at a retail store involves purchasing goods, stocking goods, selling goods,
keeping track of inventory, scheduling workers, laying out the store, locating the store,
forecasting demand, and more.
c. Operations at a hospital involves preparing the rooms, scheduling doctors, nurses and
other workers, processing paperwork, ordering supplies, caring for patients, maintaining
the facility, laying out the facility, ensuring quality and more.
d. Operations at a cable TV company involves taking orders, installing equipment,
maintaining equipment, keeping the shows on the air, scheduling work, processing
statements and payments, and more.
1-3. Inventions during the industrial revolution brought workers together under one roof in a
factory setting where division of labour and interchangeable parts encouraged the
formation of separate worker and management jobs. Ideas from the scientific management
era made work more efficient. Human relations theorists emphasized the importance of the
human element in operations management. The management science era saw many
advances in quantitative techniques and their application. The quality revolution focused
management on meeting customer expectations and emphasized quality over quantity. The
Internet brought numerous opportunities to do work faster and better. It also opened doors
to new markets worldwide. Today’s successful companies compete worldwide for both
market access and production resources.
1-4. Productivity is the ratio of output to input. Output can be expressed as units produced,
customers served, calls answered, or sales dollars. Inputs include labour, materials, capital,
or square footage. Single-factor productivity measures the ratio of an output to a single
input. Multi-factor productivity relates output to a combination of inputs that are all
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 2
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expressed in the same units (e.g., labour cost + materials cost). Total factor productivity
computes the total quantity of goods and serviced produced with all of the inputs used to
produced them.
1-5. Student answers will vary. The information can be accessed directly from the Internet.
1-6. Student answers will vary.
1-7. Students can begin this assignment by accessing Fortune’s homepage and referring to the
Fortune 500 or Global 500 by industry. The leaders in each industry are listed and there is
usually some discussion of industry concerns. Individual data on companies can be found
at Hoover’s website (www.hoovers.com).
1-8. Student answers will vary.
1-9. Student answers will vary.
1-10. Student answers will vary. The information can be accessed directly from the Internet.
1-11. The WTO is an international organization that works to establish and enforce rules of trade
between nations. WTO agreements are ratified by the governing bodies of the nations
involved. WTO’s dispute settlement process interprets agreements and rules on violations,
thereby avoiding political or military conflict. The group promotes free trade and more
recently, has helped developing nations enter the trade arena on more equitable grounds.
Currently, there are 164 member nations. Membership is achieved by meeting certain
environmental, human rights, and trade criteria, agreeing to abide by the rules of the
organization, and being approved by two-thirds of the existing membership. See
www.wto.org
1-12. Student answers will vary. Access www.worldbusinessculture.com
1-13. Student answers will vary. Access www.transparency.org
1-14. Student answers will vary. Access http://laws-lois.justice.gc.ca/eng/acts/C-45.2/ for basic
information.
1-15. Students will find a variety of answers for this question. In general, it is easy to find
mission or vision statements, but more difficult to find evidence of the mission or vision
being applied.
1-16. Strategy formulation consists of four basic steps: (1) defining a primary task—what is the
purpose of the firm? What the firm is in the business of doing? (2) assessing core
competencies—what does a firm do better than anyone else? (3) determining order winners
and order qualifiers—what wins orders in the marketplace? What qualifies a product or
service to be considered for purchase? (4) positioning the firm—what one or two important
things should the firm choose to concentrate on? How should the firm compete in the
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 3
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marketplace?
Student answers will vary. Most start-ups try too much too soon. It’s difficult to stick with
what you do best.
1-17. Core competencies are the essential capabilities that create a firm’s sustainable competitive
advantage. They have usually been built up over time and cannot be easily imitated. For
example, First National Bank, one of our local banks, is known as a risk taker. Its core
competence is its ability to size up the potential of investment opportunities. Through its
familiarity with local businesses and its experience in loan making, the bank has developed
the ability to predict which loans are worth taking extra risks.
Walmart, a successful retail store, is known for having a wide assortment of items at
competitive prices. The store carries clothing, fresh food, toys, books, and sports
equipment, and offers services such as photo printing and pharmacy. They specialize in
low prices by managing their supply chain operations and inventory carefully.
Toyota emphasizes superior quality at a price below its competitors with its Lexus line of
automobiles. To establish a special reputation for quality over the lifetime of the car, the
company set up separate sales and service facilities. When it is time for servicing, Lexus
owners can have their vehicle picked up and delivered to their home or place of business.
The car returns the same day, washed and vacuumed, often with a gift certificate inside for
a night on the town complements of the dealer.
1-18. While the answers to this question vary considerably, most students feel competent in the
technical areas of their major, but uncomfortable with their communication skills (both oral
and written) and their ability to make decisions. This opens the way for more project-
oriented assignments from the instructor. The question also helps students prepare for the
inevitable interview question—what are your strengths and weaknesses?
1-19. Order qualifiers are characteristics of a product or service that qualify it to be considered
for purchase by a customer. An order winner is the characteristic of a product or service
that wins orders in the marketplace—the final factor in the purchasing decision.
When buying a simple product like coffee, students might use order qualifiers to narrow
down options (e.g. eliminating choices that are too expensive), the using an order winner to
make the decision (e.g. choosing the option that is closest, or with the shortest line).
1-20. a. Most companies approach quality in a defensive or reactive mode; quality is confined to
minimizing defect rates or conforming to design specifications. To compete on quality,
companies must view quality as an opportunity to please the customer, not just as a way
to avoid problems or to reduce rework costs. The manufacturer of Rolex watches
competes on quality.
b. Companies that compete on cost relentlessly pursue the elimination of all waste. The
entire cost structure is examined for reduction potential, not just direct labour costs.
High volume production and automation may or may not provide the most cost-
effective alternative. Wal-Mart competes on cost.
c. Flexibility includes the ability to produce a wide variety of products, to introduce new
products and to modify existing products quickly, and, in general, to respond to
customer needs. Steelcase Canada competes on flexibility.
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d. Competing on speed requires a new type of organization characterized by fast moves,
fast adaptations, and tight linkages. Citicorp competes on speed.
e. Competing on innovation requires taking risks and challenging the status quo.
Companies must also be prepared accept failure as part of the learning process. Google,
Apple, and 3M compete on innovation, as does SpaceX.
f. Competing on service requires closeness to the customer, availability of resources,
attention to detail, and flexible operations. Ritz-Carlton competes on service.
1-21. Operations can play two important roles in corporate strategy: (1) it can provide support
for the strategy of a firm (help with order qualifiers), and (2) it can serve as a firm’s
distinctive competence (win orders).
1-22. Strategic decisions in operations and supply chain management involve products and
services, processes and technology, capacity and facilities, human resources, quality,
sourcing, and operating systems.
1-23. Policy deployment tries to focus everyone in an organization on common goals and
priorities by translating corporate strategy into measurable objectives down through the
various functions and levels of the organization. As a result, everyone in the organization
should understand the strategic plan, be able to derive several goals from the plan, and
determine how each goal ties into their own daily activities.
1-24. The balanced scorecard examines a firm’s performance in four critical areas – its finances,
customers, processes, and capacity for learning and growing. Although operational
excellence is important in all four areas, the tools in operations are most closely associated
with process.
1-25. Student answers will vary.
1-26. Student answers will vary. The balanced scorecard worksheet in Table 1.3 is helpful.
Finances might refer to future income, customers to potential employers who are interested
in both grades and experience, processes to how students will raise their grades and gain
experience, and learning and growing to developing skills in several areas.
Copyright © 2020 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
,Solutions Manual for Operations Management: Creating Value Along the Supply Chain, Second Canadian Edition 1 - 5
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Answers to Problems
(Answers may vary due to rounding)
1-1. The Kingston store is the most productive.
Store Hamilton Kingston London Waterloo
Sales volume $40,000 $12,000 $60,000 $25,000
Labour hours 250 60 500 200
Productivity $160 $200 $120 $125
1-2. a. London is the most productive ($8.33).
b. Based on productivity, the Kingston store should be closed. Other factors to consider
include total revenue, potential for growth, and options for reducing costs.
Hamilton Kingston London Waterloo
Sales volume $40,000 $12,000 $60,000 $25,000
Labour hours 250 60 500 200
Labour cost/hr $12.75 $12.50 $12.00 $11.50
Rent $1,800 $2,000 $1,200 $800
Productivity $8.02 $4.36 $8.33 $8.07
1-3. By number, Jim was more productive last year. By weight, Jim was more productive this
year.
Last yr This yr
Hours fishing 4 6
Bass caught 12 15
Average weight 20 25
Bass/hr 3 2.5
Avg Weight/hr 60 62.5
1-4. Productivity could be measured by total account dollars per hour worked, new account
dollars per hour worked, or existing account dollars per hour worked. Boisvert is the most
productive based on total output. Albert and Duong have the most new accounts, and thus
the greater potential returns in the future. However, Duong cannot work many more hours
a week and Boisvert is only working half time. Boisvert has the potential to sell more if he
works more hours.
Agents Albert Boisvert Cressey Duong
New accounts $100,000 $40,000 $80,000 $200,000
Existing accounts $40,000 $40,000 $150,000 $100,000
Labour hours 40 20 60 80
Total $/hr $3,500.00 $4,000.00 $3,833.33 $3,750.00
$ New accts/hr $2,500.00 $2,000.00 $1,333.33 $2,500.00
$ Existing accts/hr $1,000.00 $2,000.00 $2,500.00 $1,250.00
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1-5. Japan is the most productive.
Labour Hours Units of Output Productivity
Canada 79.2 87.1 1.10
Germany 89.6 103.6 1.16
Japan 86.3 117.6 1.36
1-6. Omar should probably close the plant in Guadalajara because its multifactor productivity is
the lowest, its labour productivity is the second lowest, and its output is the least of the four
plants.
Units (in 000’s) Montreal Frankfurt Guadalajara Bejiing
Finished goods 10,000 12,000 5,000 8,000
Work-in-process 1,000 2,200 3,000 6,000
Costs (in 000’s)
Labour costs $3,500 $4,200 $2,500 $800
Material costs $3,500 $3,000 $2,000 $2,500
Energy costs $1,000 $1,500 $1,200 $800
Transportation costs $250 $2,500 $2,000 $5,000
Overhead costs $1,200 $3,000 $2,500 $500
Labour productivity 3.14 3.38 3.20 17.50
Total productivity 1.16 1.00 0.78 1.46
1-7. Hill is the most productive in terms of rushing yards and touchdowns per carry. However,
Peressini has highest number of rushing yards and touchdowns. Using “carries” as the
input variable skews the results. Productivity is not always the best measure of
performance.
Candidates Hill Lévesque Peressini
Rushing yards 2,110 3,623 6,925
# Carries 105 875 1,186
# Touchdowns 15 20 70
Yards/carry 20.10 4.14 5.84
Touchdowns/carry 0.14 0.02 0.06
1-8. Productivity decreases from week to week.
Installation 1 2 3
Square Feet 11,025 12,915 22,500
# workers 4 3 5
# hours 3 5 6
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Square Feet/hr 918.75 861 750
1-9.
Centre 1 2 3 3c.
Pieces processed 1,000 2,000 3,000 5,000
Workers/hr 10 5 2 2
Hourly wage rate $20.50 $25 $27 $27
Overhead/hr $10 $25 $50 $80
Multifactor productivity 4.65 13.33 28.85 37.31
a. Work center # 3 is the most productive.
b. With a 10% raise in center 1, productivity goes down to 4.25 pieces per dollar spent.
c. With new equipment in center 3, productivity goes up to 37 pieces. Install the new
equipment.
1-10. Material productivity is stable over the 4 weeks. Labour productivity increases in week 2
and decreases in weeks 3 and 4.
Week 1 2 3 4
Units of output 2,000 4,000 5,000 7,000
# workers 4 4 5 6
Hours per week 40 48 56 70
Labour cost per hour $20 $20 $20 $20
Material (kgs.) 128 256 324 450
Material cost per kg $8 $8 $8 $8
Labour productivity [units/hr] 12.50 20.83 17.86 16.67
Labour productivity [units/$] 0.63 1.04 0.89 0.83
Material productivity [units/kg] 15.63 15.63 15.43 15.56
Material productivity [units/$] 1.95 1.95 1.93 1.94
Multifactor productivity [units/$] 0.47 0.68 0.61 0.58
1-11. Johan is the most productive.
Jake Jasbir Jennifer Johan
# ads sold 100 50 200 35
# hours spent 40 15 85 10
Output/hr 2.50 3.33 2.35 3.50
1-12. Choose Cold Case.
Alaskan Brr Cold Deep
Seal Frost Case Freeze
Purchase cost $3,270 $4,000 $4,452 $5,450
Daily energy consumption 3.61 3.88 6.68 29.07
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(kwh)
Cost per kwh $0.10 $0.10 $0.10 $0.10
Daily energy cost $0.36 $0.39 $0.67 $2.91
Daily purchase cost $2.99 $3.65 $4.07 $4.98
Total cost $3.35 $4.04 $4.73 $7.88
Volume (cu ft) 25 35 49 72
Productivity (cu ft/$) 7.47 8.66 10.35 9.14
Cost/cu ft $0.13 $0.12 $0.10 $0.11
1-13. Sweet Tooth should switch to the new process.
Current New process
process
Chocolate powder(kg) 100 200
Cocoa beans(kg) 1000 1800
Hours of processing 10 15
Cost of processing $25 $25
Cost of cocoa beans $6.80 $6.80
Labour productivity (kg/$) 0.4 0.53
Multi factor productivity (kg/$) 0.014 0.016
1-14.
Pairs of jeans 60
Workers 3
Machines 3
Hours/day 8
Labour hours / day 24
Raw material cost/ pair $10
Labour cost / hour $20
Energy cost/ hour of $1
machine time
Machine cost/ hour $10
Total energy cost $24
Total labour cost $480
Total machine cost $240
Total material cost $600
Total cost of producing $1344
60 pairs of jeans
Labour productivity 2.5
(jeans/hr)
Unit cost ($/jeans) 22.4
Multi-factor productivity 0.044643
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