Solution to Problems: Chapter 1, Operations and Productivity

Solution to Problems: Chapter 1, Operations and Productivity Problem 1: Mance Fraily, the Production Manager at Ralts Mills, can currently expect his operation to produce 1000 square yards of fabric for each ton of raw cotton. Each ton of raw cotton requires 5 labor hours to process. He believes that he can buy a better quality raw cotton, which will enable him to produce 1200 square yards per ton of raw cotton with the same labor hours. What will be …

…go, using the new paint, before the productivity drops to the current level of 0.24. In mathematical terms we make the material cost a variable (X), set the new multifactor productivity value to the current level, 0.24, and solve for X. 360/(($12x10) + 360 $(X) + $20 + $4) = 0.24 360 = 0.24($120 + 360$(X) + $20 + $4) 360 = $28.8 + 86.4$(X) + $4.8 + $.96 325.44 = 86.4$(X) $(X)= 325.44/86.4 = $3.7666 @ $3.77 It follows then that the new paint could raise Materials cost by no more than approximately $0.27 (the difference between $3.77 and $3.50) before Ms. French would experience a decrease in multifactor productivity.