1. JEANNA’s Welding and Upholstery Establishment produces a special type of metal mini-chairs, which are used mostly by Basic/Infant schools in the parish of St Elizabeth. Current operations allow the welding assembly to make 550 mini-chairs per day, in two 8-hour shifts (275 mini-chairs per shift). The JEANNA’s has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 325 mini-chairs per shift. Labor costs average $10 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3,000 per day, and rose to $3,200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day.
  1. What is the firm’s multifactor productivity before the changes?
  2. at is the firm’s multifactor productivity after the changes?


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  1. ALLISON Products produces glass bottles for use in a local beverage company. Currently, ALLISON Products produces 1600 cases of bottles per day. The 20 workers at ALLISON Products work from 7 a.m. until 4 p.m., with 30 minutes off for lunch and a 15-minute break during the morning work session and another at the afternoon work session. ALLISON Products is in the competitive packaging industry, and needs to increase productivity to stay competitive. They feel that a 20 percent increase is needed. ALLISON’s management believes that the 20 percent increase will not be possible without a change in working conditions, so they change work hours. The new schedule calls on workers to work from 7:30 a.m. until 4:30 p.m., during which workers can take one hour off at any time of their choosing. Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday. After this change, bottle production increased to 1800 cases of bottles per day.


  1. Calculate labor productivity for the initial situation
  2. Calculate labor productivity for the hypothetical 20 percent increase
  3. What is the productivity after the change in work rules?
  4. Write a short paragraph analyzing these results.
  1. Inventory Management.

I) A Furniture manufacturing company uses 1200 units of an item annually and the cost price is $250 per unit. The ordering costs are $600 per order and holding costs are $4.00 per item per annum.


  1. Calculate The economic order quantity.
  2. Determine the number of orders per annum
  3. Determine the annual stock holding cost
  4. Determine the annual ordering cost

(II) A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for business can orders be received. Management wants to reevaluate its current inventory policy, which calls for order quantities of 440 counter-top mixers. The following data are estimated for the mixer:

  • Average daily demand 100 mixers
  • Standard deviation of daily demand 30 mixers
  • Lead time (L) = 3 days
  • Holding Cost (H) = $9.40/order/year
  • Ordering Cost (S) = $35/order
  • Cycle service level = 92%
  • The distributor uses a continuous review (Q) system

  1. What order quantity Q, and reorder point, R, should be used?

2. What is the total annual cost of the system?

If on-hand inventory is 40 units, one open order for 440 mixers is pending, and no backorders exist, should a new order be placed?

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