Name: Saad Hasan Niazi Class: BBA 6C Subject: Operations Management Registration Number: 22667 Sir Name: Azhar

r Nisar

Case Study: Creative Concepts Question 1: What types of decisions must the manager make daily for his companys operations to run effectively and in the long run? Answer: The standard products warehouse is costly, so he need to reduce inventory by deciding on good supply chain and implement it. He also need to make scheduling decision to make sure there is not many raw material as work in process (WIP) status. He need to increase the capacity to accommodate demand for both product line he also separate out the producing line after increase capacity. Question 2: How did sales and marketing affect operations when they began to sell standard pieces to retail outlets? Answer: The sales is growing steadily for the standard piece. The operation is not effective to produce that much of pieces to meet the demand and it is being waste in their warehouse or still underwork in progress. This is happening because the company is more focused on custom line and given it higher priority as compared to standard line. Question 3: How has the move to producing standard furniture affected the companys financial structure? Answer: Finance and accounting of the company have indicated that the profits are not what they should be. Cost associated with the standard line are rising because there is no active scale and the inventory is increasing in the form of raw material and WIP which is holding the inventory. Additional cost is increased because warehouse has to be rented to accommodate the inventory volume. Question 4: What could have the manager done differently to avoid some of the problems he now faces? Answer: Following are the methods to avoid the problems. 1. 2. 3. 4. 5. Change manufacturing schedule to reduce WIP stock of demand line. Reduce raw material form stopping underwork in progress. Give some manufacturing priority to both custom and standard lines. Reallocate warehouse to a cheap and cost saving location. Recruit more staff or encourage its existing staff for the overtime in order to reduce delay in manufacturing line.

Problems Problem 1: (Refer to soved probem 1.) Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herring to winning from. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to $30,000 per class section from the current $25,000 per class section. The universitys budget plan is to cover recruitment costs by increasing the average class size to 75 students. Labor cost will increase to 6,500 per three-credit course. Material costs are about $25 per student for each three-credit course. Tuition will be $200 per semester credit, which is matched by state support of $100 per semester credit. A. What is the productivity ration? Compared to the result obtained in solved problem 1, did productivity increase or decrease for the course process? Solution A: Productivity Ration: Value of output: (75 students per class) (3 credit hours per student) (200 tuition + 100 state support per credit hour) = $ 67,500 / Class

Value of input: Labor + Material + overheads = 6,500 + (25 per Student x 50 student per class) + 2,500 = $38,375/ Class

Productivity Ration: = Output / Input = 67,500 / 38,375 = 1.758 In own words: Productivity has increased from 1.00 to 1.758 or bt 75.8 percent for the course process.

B. If instructors work an average of 20 hours per week for 16 weeks for each three-credit class of 75 students, what is the labor productivity ratio?

Solution B: Labor Productivity Ration: Labor hours of input: (20 hours per week) x (16 weeks per class) = 320 hours per class Labor productivity: Output / Input = 67,500 / 320 = 210.937 per hour.

Advance Problem Problem 4: The Big Black Company (BBBC) has a large order for special plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 40 hours, the BBBS production process usually produces 2,500 uniforms per week at a standard cost of $120 each. Seventy employees work the first shift and 30 the second. The contract price is #200 per uniform. Because of the urgent need, BBBC is authorized to use around-the-clock production, six days per week. When each of three shifts works 72 hours per week, production increases to 4,000 uniforms per week but at a cost of $144 each. a. Did the productivity ration increase, decrease, or remain constant? If it changed, by what percentage did it change? b. Did the labor productivity ration increase, decrease, or remain constant? If it changed, by what percentage did it change? c. Did weekly profits increase, decrease, or remain constant?

Solution A: Value of output Value of input Productivity ration = = = = = Value of output = = Value of input = = Productivity ration = 2500 x 200 = 500,000 2500 x 120 = 300,000 output / input 500,000 / 300,000 1.66 4000 x 200 800,000 4000 x 144 576,000 output / input

= =

800,000 / 576,000 1.38

Productivity ration is changed by 20 percent, it means productivity has decreases.

Solution B: Labor productivity = = = Labor productivity = = = Output / input 5000,000 / 40 12,500 per hour output / input 800,000 / 72 11.111 per hour

Labor productivity changed by 11 percent it means it has increases.

Solution C: Profit = = Profit Profit = = = Profit Difference = = = Output - input 500,000 300,000 200,000 Output input 800,000 576,000 224,000 224,000 200,000 24,000

Weekly Profits increases by $24,000.