the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decrease the number of units scrapped because of poor quality. The system is also expected to decrease the amount of labor inputs needed. The production manager is pushing for the aquisition because he believes that productivity will be greatly enhanced - particularly when it comes to labor and material inputs. Output and input data follow. The data for the computerized system are projections. Current System Computerized System Output (units) 60,000 60,000 Output selling price $80 $80 Input quantities: Materials 240,000 200,000 Labor
Richins Company is considering the acquisition of a computerized manufacturing system. The new system has a built in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decrease the number of units scrapped because of poor quality. The system is also expected to decrease the amount of labor inputs needed. The production manager is pushing for the aquisition because he believes that productivity will be greatly enhanced - particularly when it comes to labor and material inputs. Output and input data follow. The data for the computerized system are projections.
Current System Computerized System Output (units) 60,000 60,000 Output selling price $80 $80 Input quantities: Materials 240,000 200,000 Labor 120,000 80,000 Capital (dollars) $120,000 $600,000 Energy 60,000 150,000 Input prices: Materials $8.00 $10.00 Labor $18.00 $20.00 Capital (percent) 5.00% 5.00% Energy $4.00 $6.00
For each of the three following Requirements, identify the overall data analytic type that drives the analysis. Note that some of the subcomponents of the analysis may represent a particular data analytic type, but you should identify the type that drives the overall analysis.
1. Compute the partial operational ratios for matierals and labor under each alternative. Is the production manager right in thinking that materials and labor productivity increase with the automated system?
2. Computer the productivity profiles for each system. Does the computerized system improve productivity?
3. Determine the amount by which profits will change if the computerized system is adopted. Are the trade-offs among the inputs favorable? Should the computerized system be adopted?
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