QUESTION 5

Use the information provided to answer all the questions that follow:

As an operations analyst at the Massmart Group, you are currently analysing the productivity of a prospective supplier as part of a supplier selection process. You have gathered the following information about the supplier, MGX, which manufactures golf bags:

MGX assembles 200 golf clubs per day with the following resources:

Labour 400 hours per day @ R250.00 per hour

Materials R1 500 per golf club

Energy R5 000 per day

Capital costs R70 000 per day.

REQUIRED:

Answer the following questions:

5.1

Determine the labour productivity per labour-hour for the golf bags at MGX (round off answer to 1 decimal place).

(2 marks)

5.2

Assuming that MGX sell each golf club for R5 000, determine the multifactor productivity (round off answer to 3 decimal places).

(4 marks)

5.3

As part of its supplier development initiative, Massmart has assisted MGX to reduce the costs of materials by 10% without cutting production or changing any other inputs of MGX operations, determine the new multifactor productivity if the MGX golf clubs are still sold at R5000 each.

(4 marks)

5.4

Determine the percent change in multifactor productivity associated with the 10% reduction in materials costs in the operations of MGX (Hint: use the results obtained in 5.2 and 5.3).

(4 marks)

5.5 With reference to the Input-Transformation-Output process of MGX, highlight specific approaches or techniques that can be used by the operations manager to improve the productivity of the following transforming resources: 5.5.1 Machines. (2 marks)

5.5.2 Manpower. (2 marks)

5.5.3 Management. (2 marks)