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Operations Management: Productivity Ratios

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1. A computer high tech keyboards producer has an automated assembly line. The cost to produce one unit of a these computer keyboards consists of labor ($15); materials ($35); and overhead ($5). The selling price for these CDs is $75 a unit.

A. What is the current total productivity ratio?
B. To achieve 10% gain in total productivity by reducing materials cost only, by what percentage must those costs be reduced?
C. {4 points}. Suppose in the costs and revenues for 2010-1011 for this firm was as follows:

Year......................................2010.......................2011
Revenue.............................$427500....................$513750
Labor...................................$82000......................$91000
Materials.............................$184000....................$100100
Overhead............................$32000.......................$35400

Calculate the productivity ratios AND the percentage change in productivity for each from 2010 to 2011.

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Solution Summary

Operations management productivity ratios are examined. The cost and revenues for 2010-211 are determined.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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