Valentin, John Christian E.

10/13/19
BSA- 1A

QUESTIONS:
1. Map Crayola’s five pillars of operational leadership to the competitive priorities in Table 1.3.

COST

COST

INNOVATION

QUALITY
QUALITY & ETHICAL
RESPONSIBILITY

TIME

SUSTAINABILITY

FLEXIBILITY

AGILITY & RESILIENCE

 2. Create an assessment of Crayola’s competitive priorities as it relates to their Asian expansion
plans.

COMPETITIVE MEASURE CAPABILITY GAP ACTION

PRIORITY/PILLAR

Production Cost Mostly sourced in USA Foreign Multilanguage

Low-Cost Operation Transportation Cost Automated with US Expansion packaging
Material Cost workers causes Offshore
additional production
costs and sourcing

Carbon Dioxide Recycled Plastic Acceptable No Action

Sustainable Efficiency Emission Reforested Woods
Energy Consumption Solar Farm

Percent defects High consistency in Acceptable No Action

Consistent Quality rework, scrap product packaging and product
returns. quality.

High Safety Quality Certification Chemical All products are Non- Acceptable No Action
Use toxic.

New Product time to First to the market with Acceptable No Action

Development Speed market every innovation

Variety Product mix range. Wide variety of colors Acceptable No Action

And different variety of
coloring materials

Volume Flexibility Utilization Order Maintains Capacity Acceptable No Action

Fill- Rate
3. Which of the competitive priorities might present the biggest challenge to Crayola as it expands
internationally?
The biggest challenge to Crayola as it expands its business internationally in its competitive
priorities is the cost. Cost or having sufficient capital in order to maintain the quality of the product that
they will produce or deliver either local or international. The expansion cost for Crayola in order to
expand international will consume lot of capital which will be a hindrance if they will lack on financial
sustain. Many businesses fail due to undercapitalization.

REVIEW QUESTIONS
1. Alyssa’s Custom Cakes currently sells 4 birthday, 3 wedding, and 2 specialty cakes each month
for $45, $155, and $105 each, respectively. The cost of labor is $50 per hour (including benefits)
and it takes 90 minutes to produce a birthday cake, 240 minutes to produce a wedding cake,
and 60 minutes to produce a specialty cake. Alyssa’s current multifactor productivity ratio is
1.30.
a. Use the multifactor productivity ratio provided to calculate the average cost of the cakes
produced.
Given:
4 birthday cakes * $45 = $180
3 wedding cakes * $155= $465
2 specialty cakes * $105 = 210
Total Revenue: $855 per month
Multifactor productivity ratio: Output/ Input
Therefore; input = Output/ Multifactor productivity ratio
= 855/1.3
= $657.69
Total cost: $657.69
Average cost per cake: $ 73.08
b. Calculate Alyssa’s labor productivity ratio in dollars per hour for each type of cake.
Labor Productivity Ratio = Total Output/ Total Man-hours
Birthday Cake= (4 cakes * $45/cake) / (4 cakes * 1.5 hour/cake)
= 180/6
= $30/hour

Wedding Cake= (3 cakes * $155/cake) / (3 cake * 4 hours/cake)

= 465/12
= $38.75/hour

Specialty Cake= (2 cakes * $105/cake) / (2cake * 1 hour/cake)

= 210/2
= $105/hour

c. Based solely on the labor productivity ratio, which cake should Alyssa try to sell the most?
Alyssa should sell Specialty cake the most for it has the highest labor productivity

d. Based on your answer in part (a), is there a type of cake Alyssa should stop selling?
Alyssa should stop selling Birthday cakes for it has the lowest labor productivity.

2. The Big Black Bird Company (BBBC) has a large order for special plastic-lined military uniforms to
be used in an urgent military operation. Working the normal two shifts of 40 hours each per
week, the BBBC production process usually produces 2,500 uniforms per week at a standard
cost of $140 each. 72 employees work the first shift and 28 employees work the second. The
contract price is $240 per uniform. Due to the urgent need, BBBC is authorized to use around-
the-clock production, six days per week. When each of the two shifts works 72 hours per week,
production increases to 4,000 uniforms per week but at a cost of $152 each.
a. Did the multifactor productivity ratio increase, decrease, or remain the same? If it changed, by
what percentage did it change?

Multifactor Productivity Ratio: Value of Output/ Value of the input

Normal Work Hours
Total Output= 2500* $240 (Contract Price) = $600,000
Total Input= 2500* $140 (Standard Cost) = $350,000
Therefore; 600000/350000= 1.714285714

New Work Hours (Around-the-clock production)

Total Output= 4000* $240= $960,000 (Contract Price)
Total Input= 4000* $152= $608,000 (New Standard Cost)
Therefore; 960,000/608,000 = 1.578947368
Thus, Decrease in productivity (in %) = (1.714285714
-1.578947368) / 1.714285714
= 7.89%
Multifactor productivity is decreased by 7.89%

b. Did the labor productivity ratio increase, decrease, or remain the same? If it changed, by what

percentage did it change?

Labor Productivity Ratio: Total Value of Output/Total Man-hour

Normal Work Hours

$600,000 / (100 employees) (40 hours) = $150/Hour

New Work Hours (Around-the-clock production)

$960,000 / (100 employees) (72 hours) = $133.33/Hour
Thus, Decrease in productivity (in %) = (150-133.33) / 150 = 0.1111
Labor Productivity is decreased by 11.11%

c. Did weekly profits increase, decrease, or remain the same?

Profit= Total Sales – Total Cost of Goods (Weekly)

Normal Work Hours

2500(Uniforms) * $140 (Standard Cost) = $350,000 (Total Cost of Goods/Week)
2500(Uniforms) * $240 (Contract Price) = $600,000 (Total Sales Revenue/Week)
$600,000-$350,000 = $250,000 (Total Profit/Week)

New Work Hours (Around-the-clock production)

4000* $152= 608000 (Total Cost of Goods/Week)
4000* $240= 960000 (Total Sales Revenue/Week)
$960000- $608000= $352,000

. The Big Black Bird Company increased their weekly profits by $102,000