PART I.  MULTIPLE CHOICE

  1. A
  2. A
  3. D
  4. C
  5. E
  6. C
  7. B
  8. A
  9. D
  10. B
  11. E
  12. D
  13. B
  14. B
  15. C

 

PART II.  PROBLEM SOLVING

#1.

(a)  Outputs/Inputs = Productivity

            Given: Outputs = 1500 and Productivity = 2.344 loaves per labor-hour

            Thus, Labor-hours = 1500/2.344 = 640 hours

            Given: each worker works 160 hours per month

            Thus, number of workers used = 640/160 = 4

 

(b)  Multifactor productivity = Outputs/(Labor cost + Utility cost + Ingredients cost)

            Output = 1500 loaves

Labor cost = 640 hours x $8

            Utility cost = $500

            Ingredients cost = 1500 x $0.35

            Thus, multifactor productivity = 1500/6145 = 0.244

 

(c)  New output = 1500 x (1+25%) = 1875

      Labor-hours needed = 1875/2.344 = 800 hours

      Number of workers needed = 800/160 = 5

      č Need to add 1 worker

 

(d) Multifactor productivity = Outputs/(Labor cost + Utility cost + Ingredients cost)

            Output = 1875 loaves

Labor cost = 800 hours x $8

            Utility cost = $500

            Ingredients cost = 1875 x $0.35

      Thus, multifactor productivity = 1875/7556.25 = 0.248

 

(e)  Change in productivity = (0.248-0.244)/0.244 = 1.6%

 

#2.

(a)  TC_manual = $15000 + ($350+$350) x 200 = $155000

      TC_semiautomatic = $35000 + ($330+$270) x 200 = $155000

      TC_automatic = $80000 + ($350+$130) x 200 = $176000

Either the manual and semi-automatic production method gives the lowest total costs.  C&A can choose one of these methods.

 

(b)  From (a), when Q1=200 is the indifference point between manual and semi-automatic

     

      Let Q2 be the indifference point between semiautomatic and automatic method

      i.e., 35000 + 600 Q2 = 80000 + 480 Q2

             Q2 = (80000-35000)/(600-480) = 375

     

      Thus, 1 <= Q <= 200 choose manual

               200 <= Q <= 375 choose semiautomatic

               Q >= 375 choose automatic

 

(c) 

(d)  R = 800 Q

 

(e)  Let Q be the break-even point when revenue equals to total costs

      i.e., 800 Q = 15000 + 700 Q

             Q = 15000/(800-700) = 150

 

(f)  Profit = Revenue – Total costs

               = 800 x 1000 – (15000 + 700 x 1000)

               = 800000 – 715000 = 85000

 

#3.

(a)  The quality characteristic here is the “number of non-conformities” which is counted on a discrete scale.  Thus, a control chart for attribute should be used.  The number of non-conformities is counted daily.  Thus, a c-chart should be used.

 

(b)  CL = (52 + 27 + 35 + 44 + 55)/5 = 42.6

      UCL = 42.6 + 3   = 62.2

      LCL = 42.6 - 3   = 23.0

 

(c)  The chart is defined by a center line of 42.6, an upper control limit of 62.2 and a lower control limit of 23:

(d)  65 nonconformities go beyond the UCL of 62.2, indicating that a quality problem exists that needs special attention.

 

#4.

(a)

(b)  C&A should produce and market a new line of cellular phone by purchasing a CAD/CAM directly.  The expected profit is $388,000.