Operation Management Economic Order Quantity Model Extensions

Question: Discuss about theOperation Managementfor Economic Order Quantity Model Extensions. Answer: The Preliminary Numbers of UberX and UberExec drivers are as follows: Particulars UberX UberExec Driver Hour 8 8 No of Average Trips 150 80 Desired labor productivity 3 3 No of Trips per day per driver 24 24 No of Drivers required 6 3 Here the total number of trips on daily basis would be Driver hour Desired labor productivity = 8 3= 24. On the other hand, the total number of drivers required for these two types of services is as follows: No of average trips/ No of trips per day per driver = 150/24 = 6.25 for UberX and 80/24= 3.33 for UberExec. The Ubers independent contractors provide services utilizing two types of cars under UberX and UberExec. Each driver can drive 8 hour per day, but the productivity of UberX and UberExec are different. The average number of trips under UberX is 150 whereas UberExec is 80. The research further investigated that the final labor productivity of the driver of UberX is much higher than the driver of UberExcec. The main difference has incurred in the area of the requirement of drivers. Based on the calculation, this has been found that the services of UberX are much more demanding and thus, the total number of drivers requirement is just doubled in the case of UberX. According to the job design principles, this can be said that there are 4 UberX drivers (No of Trips per day per driver/average no of drivers requirements) and 8 UberExcec drivers are required to optimize the scientific design of the job. Here the element of skill variety is the main differential point of the job design. Theref ore, the human resource department of Uber needs to recruit more drivers for UberX to increase rounding trips per day and increase profitability. On the other hand, UberX car is most productive compared to UberExec because the number of average trips is high from the later one. UberX UberExec Driver Hour 8 8 No of Average Trips 150 80 Desired labor productivity 3 3 No of Trips per day per driver 24 24 No of Drivers required 6 3 Final labor productivity 19 10 Final labor productivity = Desired labor productivity = Desired labor productivity No of Drivers = 6.256= 19.75= 19 (Uber X), 3.333= 9.99 (Uber Exec) Based on the above calculation, this has clearly seen that drivers of UberX are productive compare to the services of UberExec. c) In this case, the number of trips is likely to be increased by 20 percent for both services. However, the initial number of drivers stays with Carent. Revised Average Trips 180 96 No of Revised drivers 7.5 4 New labor productivity required 23 12 Percentage increase in labor productivity 20% 20% Percentage of productivity = (New labor productivity required - Final labor productivity) Final labor productivity = (23-19) /19 = 20% Here the percentage increase in labor productivity is 20 percent. This is feasible if the labor productivity is increased at the desired level. If Uber provide incentives to drivers to drive more, then the labor productivity will be increased. Calculation of EOQ Annual Demand 74880 Each order costs $30 Holding costs per unit as per housing costs 9 as per Investment costs 12.6 EOQ $236 $168 No of orders 318 445 No of working days per year 312 312 Time between orders (No of working days per year/No of order) in days 1 1 (Source: Created by author) Here Annual demand = 8 trips $180 52weeks = $74880 EOQ= Square root of 2Annual demand per order cost/ holding costs per unit. Here two EOQ has been ascertained as per housing costs and investments costs. Thus, as per housing costs= Square root of 27488030/9= $236 As per Investment costs = Square root of 2 7488030/12.6 = $168 Bibliography: Lev, B. (2013). Economic Order Quantity Model Extensions.Encyclopedia of Operations Research and Management Science, 464-466. Taleizadeh, A. A., Pentico, D. W. (2013). An economic order quantity model with a known price increase and partial backordering.European Journal of Operational Research,228(3), 516-525.