# SUPPLYCHAIN ASSIGNMENT 3

## Productivity Calculations

Productivity Analysis Assignment

Total = 55 points: Productivity Calculation Tab (30 points) +

## What-If Analysis

Tab (25 points)

Assignment Learning Objectives Use data in columns C & D for the Data: Calculation Exercises 1a – 6c 1. Calculate single factor and total factor productivity measures Metric Parent (Domestic) Subsidiary (Less Developed Country) Hint: Use Excel formulas to calculate your answer. 2. Interpret productivity measures and draw appropriate conclusions Sales (units) 1,850,000 750,000 For Example: To calculate the Parent’s total labor dollars, you multiply labor hours * labor cost 3. Use formulas in Excel Units Produced 1,425,000 479,586 In Excel, you enter: =C8*C9 4. Use Excel to perform “What-If” Analysis Labor

(hours) 40,000 20,000 The “=” sign tells Excel that you are entering a formula and then you multiply the two cells that contain your data Labor Cost (\$) per hour \$14.56 \$5.51 Materials Cost (\$) \$400,259 \$201,378 Equipment (Hours) 120,598 30,578 Equipment Cost (\$) \$1,359,600 \$225,000 Fixed Costs (\$) \$2,000,000 \$725,000 Selling Price per Unit \$19.99

\$19.99

Total points this worksheet = 30 points Calculation Exercises: Labor Productivity (

units/hour

) 1a. Compute the single-factor productivity for labor for the Parent operations in units per hour (enter your formula in cell B20). Cell B20 must be a formula units/labor hour 1b. Compute the single-factor productivity for labor for the Subsidiary operations in units per hour (enter your formula in cell B23). Cell B23 must be a formula

units/labor hour

1c. Interpret your findings by indicating which of the two entities is more productive in terms of single-factor labor productivity in units per hour Labor Productivity (

units/\$

) 2a. Compute the single-factor productivity for labor for the Parent operations in units per dollar (enter your formula in cell B31). Cell B31 must be a formula units/labor \$ 2b. Compute the single-factor productivity for labor for the Subsidiary operations in units per dollar (enter your formula in cell B34). Cell B34 must be a formula

units/labor \$
2c. Interpret your findings by indicating which of the two entities is more productive in terms of single-factor labor productivity in units per dollar. Materials Productivity (units/\$) 3a. Compute the single-factor productivity for materials for the Parent operations in units per dollar (enter your formula in cell B42). Cell B42 must be a formula

units/\$
3b. Compute the single-factor productivity for materials for the Subsidiary operations in units per dollar (enter your formula in cell B45). Cell B45 must be a formula

units/\$
3c. Interpret your findings by indicating which of the two entities is more productive in terms of single-factor materials productivity in units per dollar. Equipment Productivity (units/hour) 4a. Compute the single-factor productivity for equipment for the Parent operations in units per hour (enter your formula in cell B53). Cell B53 must be a formula

units/hour
4b. Compute the single-factor productivity for equipment for the Subsidiary operations in units per hour (enter your formula in cell B56). Cell B56 must be a formula

units/hour
4c. Interpret your findings by indicating which of the two entities is more productive in terms of single-factor equipment productivity in units per hour. Equipment Productivity (units/\$) 5a. Compute the single-factor productivity for equipment for the Parent operations in units per dollar (enter your formula in cell B64). Cell B64 must be a formula

units/\$
5b. Compute the single-factor productivity for equipment for the Subsidiary operations in units per dollar (enter your formula in cell B67). Cell B67 must be a formula

units/\$
5c. Interpret your findings by indicating which of the two entities is more productive in terms of single-factor equipment productivity in units per dollar. Total-Factor Productivity: 6a. Compute the total-factor productivity (all factors) for the Parent operations in units per dollar (enter your formula in cell B75). Cell B75 must be a formula

units/\$
6b. Compute the total-factor productivity (all factors) for the Subsidiary operations in units per dollar (enter your formula in cell B78). Cell B78 must be a formula

units/\$
6c. Interpret your findings by indicating which of the two entities is more productive in terms of total-factor productivity in units per dollar.

What-If Analysis

Productivity Analysis Assignment

Data:

Metric
Parent (Domestic)

Parent (Domestic)

Sales (units)
1,850,000
750,000

1,850,000

Units Produced
1,425,000
479,586

1,425,000

Labor (hours)
40,000
20,000

Labor Cost (\$) per hour
\$14.56
\$5.51

\$14.56

Materials Cost (\$)
\$400,259
\$201,378

\$400,259

Equipment (Hours)
120,598
30,578

Equipment Cost (\$)
\$1,359,600
\$225,000

Fixed Costs (\$)
\$2,000,000
\$725,000

Selling Price per Unit
\$19.99
\$19.99

\$19.99

Materials Productivity (units/\$)

Equipment Productivity (units/hour)

Equipment Productivity (units/\$)

Labor
 Total = 55 points: Productivity Calculation Tab (30 points) + What-If Analysis Tab (25 points) Current Values Use column F for question 8 Subsidiary (LDC) 30,000 100,000 \$1,248,000 \$3,500,000 What-If Productivity Values Based on New Data Entered in Column F Measure Parent Organization Labor Productivity (units/labor hour) 47.50 Labor Productivity (units/labor \$) 3.26 3.56 14.25 1.14 Total-Factor Productivity (units/\$) 0.26 7. Provide one possible explanation how the Parent can be more productive when considering labor productivity in units per hour, but the subsidiary is more productive in units per dollar.) Parent Equipment Purchase (Part #1) 8. Assume purchase of new equipment at an incremental, one-time fixed cost of \$1,500,000 resulting in a reduction in labor hours to 30,000, a reduction in Equipment Hours to 100,000, and a reduction of Equipment Costs to \$1,248,000 with all other costs remaining the same. Change the appropriate values in column F above. Answer the questions below by comparing the new productivity value in cells D18 through D23 to the values you calculated on the “Productivity Calculations” worksheet. For example, if the value in D18 on this worksheet (Labor Productivity in units/labor hour) is less than the value for Labor Productivity in units/labor hour for the Parent operations on the “Productivity Calculations” worksheet, then choose “decreased” Productivity Measure Choose the correct answer for each productivity calculation Labor Productivity in terms of units/labor hour Labor Productivity in terms of units/labor \$ Materials Productivity in terms of units/Materials Cost (\$) Equipment Productivity in terms of units/hour Equipment Productivity in terms of units/\$ Total Factor Productivity in terms of units/\$ Parent Equipment Purchase (Part #2) 9. Calculate Total Revenue prior to any equipment changes using data in cells C6 through C14 above. The formula for Profit is Total Revenue – Total Costs The formula for Total Revenue is Total Units Sold * Selling Price per Unit Pre Equipment Purchase Total Profit Post Equipment Purchase Total Profit 10. Summarize your observations concerning how the potential new equipment purchase will impact each of the productivity values and total revenue. Provide a recommendation whether to purchase the equipment and also provide supporting evidence for your recommendation.

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