CHAPTER 5

Selection in resent economy

Solved Supplementary Problems
5-1. An Industrial Engineer has designed two alternative methods for accomplishing a production job
both methods involve the acquisition of the same working place and other capital equipment to be used
for this job only.
Method A calls for a crew consisting of three men each costing P30.00 per hour. This method
will result in the production of 10 units per hour of which two will be reject.
Method B calls for a crew of two men each costing P35.00 per hour and should result in the
production of eight units per hour of which one will be reject.

The coost of the direct material lost in each reject is P20.00. if a certain total number of unit is to
be produced. Find which method is economical.

Solution:
Method A:
(30) (3) + (2) (20)
10 - 2 = P 16.25
Method B:
(35) (2) + 20
8 - 1 = P 12.86

Answer: Method B is economical.

5-2. An executive receives an annual salary of P600.000 and his secretary a salary of P180.000. A certain
task can be performed by the consecutive working alone in 4 hours. If he delegates the task to his
secretary it will require him 30 minutes to checked the finish work. Due to the Unfamiliarity of the
secretary to the task. It takes her an additional time of 6 hours after being constructed. Considering salary
costs only. Determine the cost of performing the task by each method. If the secretary works 2,400 hours
a year and the executive 3,000 a year.

Solution:

if the executive works alone:

Annual Salary = P600,000.00
Time to finish the work = 4 hours
Annual Working Hours = 3000hrs/yr
P600,000/yr
Rate per hour = 3000hrs/yr = P200.00 / hour
Cost of performing the task = P200.00 / hour x 4000 hrs = P800.00

Answer: P800.00

If the executive delegates the work to his secretary:

Annual Salary of the executive = P 600,000.00
Annual Salary of the secretary = P 180,000.00
Annual Working hours of the executive = 3000hrs / yr
Annual Working hours of the Secretary = 2400hrs / yr
P 6000,000.00 / yr
Rate per hour of the executive = 3000hrs / yr

Rate per hour of the secretary = P180,000.00 / yr

2400hrs / yr = P 75.00
Note: the Executive works 30 mins. To explain the work and another 45 mins to check the finished work
for a total of 1.25 hrs. and the secretary works 30 mins. For the explaination of the work and additional 6
hours. To finish the work for a total of 6,5 hours.

Cost for performing the work= ( 200.00/hr x 1.25 hrs) + (75.00/hr x 6.5 hrs) = P 737.50

Answer: P 737.50