MgtOp 340 - Operations Management (Section 1) Washington State University Spring 2015 Problem Set #1 - Handwritten Section Due: February 12, 2015 (The online portion of the assignment is found in MyOMLab) Show your work! (Please round all reliability answers to four decimal places, e.g., 0.1234 or 12.34%) 1. (5 points) If outputs decrease by 20% and inputs increase by 30%, what is the percentage change in productivity? 2. (5 points) Suppose that a firm is considering opening a plant in China, and the current exchange rate is 6.25 Chinese Yuan (CNY) per dollar. Also, the Chinese wage rate is 7.5 CNY per hour. Suppose further that U.S. workers can produce 20 units per hour, while workers in China are expected to be able to produce 15 units per hour. After factoring in productivity differences, what is the \"relative\" wage rate (in dollars, rounded to the nearest penny) of operating in China? 3. (15 points) Consider an expensive part with a reliability of 95.6%. If the part fails, it will cost the firm $4000. a. What is the expected failure cost per part? b. On each part, a backup can be installed with a cost of $112. If the reliability for the backup is 50%, would the installment of this backup be a good investment? Support your