DELL LAPTOP

Lois is the manufacturing manager of Dell Laptop division and

she wants to determine the best option proposed by her supervisors to
increase the productivity performance of manufacturing plant. Currently,
the plant has 30 staff members working 8 hours per day at a rate of
$12.00 per hour. There are 4 machines and each consume 300 kilowatt-
hours (KWH) of power per day at a cost of $3.00 per KWH. The plant
produces 30 units per day and the material cost per unit is $5.00. Option
1 is to reduce the material cost per unit by 20% but raise the number of
staff members by 20% and units produced per day by 20%. Option 2 is to
reduce the the payroll cost per hour by 25% and KWH used per machine
by 15% but raise the units produced per day by 10%. Option 3 is to
reduce the number of staff members by 30% and the mateial cost unite
by 40% but raise the number of machines by 25%. Option 4 is to reduce
the payroll cost per hour by 50% but raise the working hours per day by
25% and power cost per KWH by 100% and units produced per day by
30%. Which of the four options can provide the highest productivity
increase in terms of labor only, power only, or both factors? How much is
the increase?
 Data Summary
ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4
No. of staff 20 ??? -5% 30% ???
Working 8 -10% ??? ??? 10%
hrs./day
Payroll cost 20 ??? -15% ??? ???
No. of 5 -20% ??? ??? -40%
machines
KWH 400 ??? ??? 5% ???
used/machine
Power 2 ??? ??? ??? 50%
cost/KWH
Units 25 -20% 20% ??? ???
produced/day
Material cost 8 ??? ??? -25% ???
 Effect of Proposal
ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4
No. of staff 20 20 19 26 20
Working 8 7.2 8 8 8.8
hrs./day
Payroll cost 20 20 17 20 20
No. of 5 4 5 5 3
machines
KWH 400 400 400 420 400
used/machine
Power 2 2 2 2 3
cost/KWH
Units 25 20 30 25 25
produced/day
Material cost 8 8 8 6 8
 Labor Productivity

ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4

Labor-hour/day 160 144 152 208 176
Units/labor-hour 0.1563 0.1389 0.1974 0.1201 0.1420
Increase (decrease) from -.0174 0.0411 -0.0362 -0.0143
current, units
Increase (decrease) from -11% 26% -23% -9%
current, %
Best option-maximum NO YES NO NO
 Power productivity

ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4

KWH used/day 2,000 1,600 2,000 2,100 1,200
Units/KWH 0.0125 0.0125 0.0150 0.0119 0.0208
Increase (decrease) from 0 0.0025 -0.0006 0.0083
current, units
Increase (decrease) from 0 20% -5% 66%
current, %
Best option-maximum NO NO NO YES
 Multifactor Productivity (per day)
ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4
Labor cost/day 3,200 2,880 2,584 4,160 3,520
Power cost/day 4,000 3,200 4,000 4,200 3,600
Material cost/day 200 160 240 150 200
Total cost/day 7,400 6,240 6,824 8,510 7,320
Units 0.0034 0.0032 0.0044 0.0029 0.0034
Increase (decrease) from -0.0002 0.0010 -0.0005 0
current, units
Increase (decrease) from -6% 29% -15% 0
current, %
Best option-maximum NO YES NO NO
LENOVO LAPTOP

Princes is the vice president of Lenovo’s laptop division and she

wants to determine the best option proposed by his supervisors to increase
the productivity performance of manufacturing plant. Currently, the plant has
20 staff members working 8 hours per day at a rate of $20.00 per hour.
There are 5 machines and each consume 400 kilowatt-hours (KWH) of
power per day at a cost of $2.00 per KWH, the plant produces 25 units per
day and the material cost per unit is $8.00. Option 1 is to reduce the working
hours per day by 10%, number of machines by 20%, and units produce per
day by 20%. Option 2 is to reduce the number of staffs by 5% and the payroll
cost per hour by 15% but raise the units produced per day by 20%. Option 3
is to reduce the material cost per unit by 25% but raise the number of staff
members by 30% and KWH used per machine by 5%. Option 4 is to reduce
the number of machines by 40% but raise the working hours per day by 10%
and power cost per KWH by 50%. Which of the four options can provide the
highest productivity increase in terms of labor only, power only, or both
factors? How much is the increase?
 Data Summary
ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4
No. of staff 30 20% ??? -30% ???
Working 8 ??? ??? ??? 25%
hrs./day
Payroll cost 12 ??? -25% ??? -50%
No. of 4 50% ??? 25% ???
machines
KWH 300 ??? -15% ??? ???
used/machine
Power 3 ??? ??? ??? 100%
cost/KWH
Units 30 ??? 10% ??? 30%
produced/day
Material cost 5 -20% ??? -40% ???
 Effect of Proposal
ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4
No. of staff 30 36 30 21 30
Working 8 8 8 8 10
hrs./day
Payroll cost 12 12 9 12 6
No. of 4 6 4 5 4
machines
KWH 300 300 255 300 300
used/machine
Power 3 3 3 3 6
cost/KWH
Units 30 30 33 30 39
produced/day
Material cost 5 4 5 3 5
 Labor Productivity

ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4

Labor-hour/day 240 288 240 168 300
Units/labor-hour 0.1250 0.1042 0.1375 0.1786 0.1300
Increase (decrease) from -0.0208 0.0125 0.0536 0.0050
current, units
Increase (decrease) from -17% 10% 43% 4%
current, %
Best option-maximum NO NO YES NO
 Power productivity

ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4

KWH used/day 1,200 1,800 1,020 1,500 1,200
Units/KWH 0.0250 0.0167 0.0324 0.0200 0.0325
Increase (decrease) from -0.0083 0.0074 -0.0005 0.0075
current, units
Increase (decrease) from -33% 29.6% -2% 30%
current, %
Best option-maximum NO NO NO YES
 Multifactor Productivity (per day)

ITEM CURRENT OPTION 1 OPTION 2 OPTION 3 OPTION 4

Labor cost/day 2,880 3,456 2,160 2,016 1,800
Power cost/day 3,600 5,400 3,060 4,500 7,200
Material cost/day 150 120 165 90 195
Total cost/day 6,630 8,976 5,385 6,606 9,195
Units 0.0045 0.0033 0.0061 0.0045 0.0042
Increase (decrease) from -0.0012 0.0016 0 -0.0003
current, units
Increase (decrease) from -27% 36% 0 -7%
current, %
Best option-maximum NO YES NO NO