2) If the ratio of labor costs to materials cost is 1/2 and labor costs are decreasing by 10 percent per year, what is the ratio at the end of the second year? (Note: This means that at the present labor cost is 50 percent materials costs.) Does the result seem reasonable?
3) If labor is 20 percent and materials 80 percent of COGS say $20 and $80, then a 10 percent reduction in labor costs yields $ 18 added to $ 80 totals $98. Thus produces a 2 percent reduction in total costs [i.e., (100-98)/100=0.02]. Make the same comparison for a 10 percent reduction in materials costs.


1) Seven jobs will be in the shop next week. The demand in units for each job (called dj) and the production rates of the standard operator in pieced per standard operator hour for each type of job (called PRj) are given as follows:

Job A B C D E F G
Dj 600 1,200 500 50 2,000 20 800
PRj 60 20 25 10 40 2 40

What production capacity is required to complete all of these jobs? (Use standard operator hours) Using the QMpom module called Production Scheduling (Shortest Processing Time [STP]) will provide some useful insights concerning the best sequence for completing the work in Problem 1

2) Six service calls are on hand for next week. The number of steps required for each has been determined and is listed as dj. The supervisor is designated as the standard operator. Her out rates are labeled as PRj. They are measured in steps per standard operator hour for each type of job.

Job A B C D E F
Dj 500 400 200 150 2,000 48
PRj 100 20 25 75 400 12
What workforce capacity in standard operator hours is needed to complete all service calls?