Ch 61 IT-390Preliminary and Detail Methods. 2 Design and Evaluation ä Preliminary Estimate requested during the initial evaluation for several reasons:

Ch 6Ch 6 11

IT-390 Preliminary and Detail MethodsIT-390 Preliminary and Detail Methods

22

Design and EvaluationDesign and Evaluation

Preliminary Estimate requested during the Preliminary Estimate requested during the initial evaluation for several reasons:initial evaluation for several reasons:

1) Investigate the validity of the project1) Investigate the validity of the project 2) Clarify direction or change direction2) Clarify direction or change direction 3) To allow proper preparation3) To allow proper preparation

33

Design and EvaluationDesign and Evaluation

Preliminary Estimates - limited facts Preliminary Estimates - limited facts specificsspecifics

ROM (Rough Order of Magnitude)ROM (Rough Order of Magnitude) Methods used are:Methods used are:

1) Rules of thumb (heuristic approach)1) Rules of thumb (heuristic approach) 2) Simple calculations2) Simple calculations

44

Design and EvaluationDesign and Evaluation

Preliminary EstimatesPreliminary Estimates less than accurateless than accurate Dollarless in valueDollarless in value No substantial foundationNo substantial foundation Invaluable to continuing or terminating the Invaluable to continuing or terminating the

operation, project, product, or system estimate operation, project, product, or system estimate in whole or part.in whole or part.

55

Design and EvaluationDesign and Evaluation

Detail Estimates are normally a "re-Detail Estimates are normally a "re-estimate”estimate” Re-estimate of the Preliminary EstimateRe-estimate of the Preliminary Estimate More discrete informationMore discrete information Increased accuracyIncreased accuracy Greater legitimacy of analysis Greater legitimacy of analysis

(Mathematical/Factual)(Mathematical/Factual)

66

OpinionOpinion

Opinion - judgment or belief stronger than a Opinion - judgment or belief stronger than a perception, but weaker than positive perception, but weaker than positive knowledge.knowledge. 1) Natural part, but not uneducated ones1) Natural part, but not uneducated ones 2) Capable, experienced engineer - good 2) Capable, experienced engineer - good

working knowledge working knowledge 3) Natural/Planned experiences3) Natural/Planned experiences

common sense, judgment, observations, gut feelings, all common sense, judgment, observations, gut feelings, all of which can also be done collectively (with others).of which can also be done collectively (with others).

77

ConferenceConference

Conference is formulating an educated Conference is formulating an educated opinion collectively with "others".opinion collectively with "others". A consensus (agreement) reachedA consensus (agreement) reached "others" - knowledge in specific areas"others" - knowledge in specific areas engineers only - individual designs (model of engineers only - individual designs (model of

estimation)estimation) Downfall - lack of adequate analysis and Downfall - lack of adequate analysis and

verifiable factsverifiable facts

88

ComparisonComparison

Similar to "Conference" but uses formal Similar to "Conference" but uses formal "Logic”"Logic”

Compare to similar item(s)Compare to similar item(s)

99

UnitUnit

Most popularMost popular AverageAverage Rough Order of magnitude (ROM)Rough Order of magnitude (ROM) Lump sumLump sum Module estimatingModule estimating

Examples of unit estimates include:Examples of unit estimates include: $/sq. foot (the / means “per”)$/sq. foot (the / means “per”) $/pound$/pound $/machine shop man hour$/machine shop man hour

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LearningLearning

Idea - more often an operation is performed, Idea - more often an operation is performed, less time will be required to complete itless time will be required to complete it

Repetition results in less time or effort Repetition results in less time or effort expendedexpended

The improved performance is called The improved performance is called ""LearningLearning""

1111

LearningLearning

Identifying Situations for Use of LearningIdentifying Situations for Use of Learning

Not used in all situationsNot used in all situations

Must haveMust have opportunity for improvementopportunity for improvement reduction in labor hours per unitreduction in labor hours per unit

1212

LearningLearning

Use of the improvement curve should be Use of the improvement curve should be considered in situations where there is:considered in situations where there is: A high proportion of manual laborA high proportion of manual labor Uninterrupted productionUninterrupted production Production of complex itemsProduction of complex items No major technological changeNo major technological change Continuous pressure to improveContinuous pressure to improve

1313

LearningLearning

Factors that Support ImprovementFactors that Support Improvement Job Familiarization by WorkersJob Familiarization by Workers Improved Production ProceduresImproved Production Procedures Improved Tooling and Tool CoordinationImproved Tooling and Tool Coordination Improved WorkFlow OrganizationImproved WorkFlow Organization Improved Product ProducibilityImproved Product Producibility Improved Engineering SupportImproved Engineering Support Improved Parts SupportImproved Parts Support

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LearningLearning

First application - manufacture of airframesFirst application - manufacture of airframes

Costs lowered with increasing quantity of production or Costs lowered with increasing quantity of production or experienceexperience

Rate of improvement is 20% between doubled quantitiesRate of improvement is 20% between doubled quantities

Therefore, learning curve is 80% or, 2nd unit will take Therefore, learning curve is 80% or, 2nd unit will take 80% labor of what it took on 1st unit80% labor of what it took on 1st unit

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LearningLearning

Other names for learning include:Other names for learning include:

Manufacturing progress functionManufacturing progress function

Experience or dynamic curveExperience or dynamic curve

1616

LearningLearning

The learning model is based on 3 The learning model is based on 3 assumptions:assumptions: 1) Amount of time or cost required to complete a unit of 1) Amount of time or cost required to complete a unit of

product is less each time the task is undertakenproduct is less each time the task is undertaken

2) Unit time will decrease at a decreasing rate (in other 2) Unit time will decrease at a decreasing rate (in other words, the time reduction will slow as time moves on)words, the time reduction will slow as time moves on)

3) Reduction in unit time follows the model y = ax3) Reduction in unit time follows the model y = axbb (curvilinear from Ch 5)(curvilinear from Ch 5)

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LearningLearning

The underlying hypothesis says: "The The underlying hypothesis says: "The direct labor man hours necessary to direct labor man hours necessary to complete a unit of product will decrease by complete a unit of product will decrease by a constant percentage each time the a constant percentage each time the production quantity is doubled."production quantity is doubled."

1818

Learning Curve ExampleLearning Curve Example

1919

LearningLearning

Several equations in this section are useful Several equations in this section are useful to us:to us: 1)1) Eq. Eq.

2)2) Eq. 6.9, pg. 259Eq. 6.9, pg. 259

3)3) Eq. 6.13, pg. 261Eq. 6.13, pg. 261

4)4) Eq.Eq.

s

Nj

Ni

Tj

Ti

2

log

Logs

NjNi

TjTis

loglog

loglog

sNK

NK

T

T

N

N 2)(

)2( 22

2020

LearningLearning

Where for each,Where for each, T = effort per unit of productionT = effort per unit of production N = unit numberN = unit number S = slope of improvement rate, a constantS = slope of improvement rate, a constant K = Constant, for unit 1, dimensions compatible to TK = Constant, for unit 1, dimensions compatible to T = the percent learning as a decimal= the percent learning as a decimal

These all assume that (Ni , Ti) and (Nj , Tj) are two points on a These all assume that (Ni , Ti) and (Nj , Tj) are two points on a log - log curve (straight line) of "N" vs "T"log - log curve (straight line) of "N" vs "T"

T

N

Effort. Labor Rate, etc.

Unit #

(Ti,Ni)

(Tj,Nj)

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LearningLearning

Problem 6.27, pg 294,Problem 6.27, pg 294, Supplemental ProblemSupplemental Problem

For the following problems, assume that the unit line is For the following problems, assume that the unit line is linear.linear. Find the first unit value when the 100Find the first unit value when the 100thth unit is 60 hours with unit is 60 hours with

81% learning.81% learning. Find the value for unit 6 when unit 3 is 1000 hours with 74% Find the value for unit 6 when unit 3 is 1000 hours with 74%

learning.learning. If the unit value at number 1 $2000, then find the unit dollars If the unit value at number 1 $2000, then find the unit dollars

for units 20 and 40 with learning rates of 93% and 100%.for units 20 and 40 with learning rates of 93% and 100%. If the cumulative average time at unit 100 is 100, then find the If the cumulative average time at unit 100 is 100, then find the

unit, cumulative, and average time at unit 101 for a learning unit, cumulative, and average time at unit 101 for a learning rate of 92%.rate of 92%.

2222

LearningLearning

Calculated by regression models since data Calculated by regression models since data of many points are requiredof many points are required

There are two approaches to learning There are two approaches to learning curves:curves: 1) The 1) The WrightWright (cumulative average) system (cumulative average) system 2) The 2) The BoeingBoeing (unit) system (unit) system

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LearningLearning

Ostwald refers to the Crawford system as the Ostwald refers to the Crawford system as the "Boeing" system"Boeing" system

In Fig. 6.4 (pg. 258)In Fig. 6.4 (pg. 258) Two systems so it's important to know what data Two systems so it's important to know what data

has been collectedhas been collected Is it for unit cost or cumulative average cost?Is it for unit cost or cumulative average cost?

Each requires a different system and a different set Each requires a different system and a different set of equationsof equations

2424

LearningLearning

Wright SystemWright System Boeing SystemBoeing System cumulative average per unitcumulative average per unit cumulative averagecumulative average Tá = KNTá = KNss Ta = Ta = KNKNss / / (1+s)(1+s)

cumulative total effort from unit 1 - Ncumulative total effort from unit 1 - N cumulative totalcumulative total Tć= KNTć= KNs+1s+1 Tc = Tc = TTuu or Tc = ( or Tc = (TTaa))

(N)(N)

unit effortunit effort unit effortunit effort Tú = KNTú = KNs+1s+1 -K(N-1) -K(N-1) s+1s+1 Tu = KNTu = KNss

NotesNotes: Plot of Tá & Tu are assumed to be linear.: Plot of Tá & Tu are assumed to be linear. The “T” in Tá is for The “T” in Tá is for timetime. For . For costcost we could have used a “C” as in Cá, but for we could have used a “C” as in Cá, but for

simplicity, we will leave the equations as “T”s even when dealing with simplicity, we will leave the equations as “T”s even when dealing with costcost..

N = unit numberS = slope of improvement rate, a constantK= constant, for unit one

2525

LearningLearning

Values in Appendix 5, pg. 553Values in Appendix 5, pg. 553

Assumption - "cumulative average" data Assumption - "cumulative average" data have been collected and plotted to form the have been collected and plotted to form the straight line in regression analysis (Wright straight line in regression analysis (Wright system)system)

2626

LearningLearning

Example of Wright and Boeing MethodsExample of Wright and Boeing Methods

2727

LearningLearning

Slope - determined from Slope - determined from historical/predicted from experiencehistorical/predicted from experience

Minimal improvement in "hard" tooling VS Minimal improvement in "hard" tooling VS manual labormanual labor

2828

LearningLearning

Learning curve values typical of general Learning curve values typical of general industry groups as of 1995 were:industry groups as of 1995 were: AerospaceAerospace 85%85% ShipbuildingShipbuilding 80-85%80-85% Complex machine tools for new models Complex machine tools for new models 75-85%75-85% Repetitive electronics mfg.Repetitive electronics mfg. 90-95%90-95% Repetitive machining or punch-press oper.Repetitive machining or punch-press oper. 90-95%90-95% Repetitive clerical operationsRepetitive clerical operations 75-85%75-85% Repetitive welding operationsRepetitive welding operations 90%90% Construction operationsConstruction operations 70-90%70-90% Raw materialsRaw materials 93-96%93-96% Purchased partsPurchased parts 85-88%85-88%

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LearningLearning

Theoretical First Unit (TFU) Cost + an estimate of Theoretical First Unit (TFU) Cost + an estimate of the learning curve slope = a cost estimate in (Ch 8)the learning curve slope = a cost estimate in (Ch 8) 1) Risk Method - Both the TFU and learning curve slope are 1) Risk Method - Both the TFU and learning curve slope are

estimatesestimates 2) If slope of the curve is off only +/-5%, at the 1000th unit, 2) If slope of the curve is off only +/-5%, at the 1000th unit,

estimate is off by estimate is off by 68%68% 3) The TFU cost is the cost (in dollars or man hours) to produce unit 3) The TFU cost is the cost (in dollars or man hours) to produce unit

#1#1 4) "theoretical" since rarely will the cost of the first unit produced 4) "theoretical" since rarely will the cost of the first unit produced

match this figurematch this figure 5) Why? Because we typically build several prototypes before 5) Why? Because we typically build several prototypes before

reaching the 1st unit that have the effect of lowering its costreaching the 1st unit that have the effect of lowering its cost