Please compute the multifactor productivity for process Alpha and Beta. Which process, Alpha or Beta, is more productive? Which one would you recommend? b. If the company chooses the process you recommend, how much increase in productivity (in percentage) the company will get?

Please compute the multifactor productivity for process Alpha and Beta. Which process, Alpha or Beta, is more productive? Which one would you recommend? b. If the company chooses the process you recommend, how much increase in productivity (in percentage) the company will get?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.8: Data Envelopment Analysis (dea)

Problem 42P

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Concept explainers

Overall Equipment Effectiveness

Overall equipment effectiveness or OEE as it is known can be defined as a widely standard to measure manufacturing productivity. In other words, it can also be defined as the exact percentage of time which is productive. If the score of overall equipment effectiveness is 100%, it is an indication that only good parts are being manufactured with no stop time. Hence OEE of 100% means 100% quality, performance & also availability.

Question

1. Cardinal Inc. makes a variety of electronic products. Its camera manufacturing plant is considering choosing between two different processes named Alpha and Beta, which can be used to make two component parts A and B. To make the correct decision, the managers would like to compare the multi-factor productivity of process Alpha with that of process Beta.

The value of process output for component A and B are $175 and $150 per unit, respectively. The corresponding overhead cost is $6,000 for Alpha process and $5,000 for Beta process. The table below presents detailed information.

	Process Alpha		Process Beta
	Product A	Product B	Product A	Product B
Output (units)	60	60	40	80
Labor ($)	$1200	$1400	$1000	$2000
Material ($)	$2500	$3000	$1500	$3500

Please answer the following questions:

a. Please compute the multifactor productivity for process Alpha and Beta. Which process, Alpha or Beta, is more productive? Which one would you recommend?

b. If the company chooses the process you recommend, how much increase in productivity (in percentage) the company will get?

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