Measuring Output Rates Supplement H Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall H - 01.

Measuring Output RatesSupplement H

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 01

Work Standards • Work standard– The time required for a trained worker to perform a task

following a prescribed method with normal effort and skill.

• Managers use work standards to: – Establishing prices and costs– Motivating workers– Comparing alternative process designs– Scheduling– Capacity planning– Performance appraisal


Methods of Work Measurement

• The time study method

• The elemental standard data approach

• The predetermined data approach

• The work sampling method

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H -03

The Time Study Method• Time study is the method used most often Step 1: Selecting work elements Step 2: Timing the elements Step 3: Determining sample size

2

tp

zn


The Time Study MethodTypical values of z for this formula are as follows:

Desired Confidence (%) z

90 1.65

95 1.96

96 2.05

97 2.17

98 2.33

99 2.58


Example H.1A coffee cup packaging operation has four work elements. A preliminary study provided the following results:

Work Element

Standard Deviation, , (min)

Select Time, t, (min)

Sample Size

1. Get two cartons 0.0305 0.50 5

2. Put liner in carton 0.0171 0.11 10

3. Place cups in carton 0.0226 0.71 10

4. Seal carton and set aside 0.0241 1.10 10

• Work element 1 was observed only five times because it occurs once every two work cycles.

• The study covered the packaging of 10 cartons. • Determine the appropriate sample size if the estimate for the select

time for any work element is to be within 4 percent of the true mean 95 percent of the time.


Example H.1

Work element 1: n =

Work element 2: n =

Work element 3: n =

Work element 4: n =

2

500003050

040961

..

.

.= 9

2

11001710

040961

..

.

.= 58

2

71002260

040961

..

.

.= 3

2

10102410

040961

..

.

.= 2


The Time Study MethodStep 4: Setting the standard (ST)

Apply subjective performance rating factor (RF), calculate normal times (NT), normal time for the cycle (NTC), and adjust for allowances

NTC = NT

ST = NTC(1 + A)where F = the frequency of occurrence A = proportion of the normal time added for allowances


Example H.2Suppose that 48 additional observations of the coffee cup packaging operation were taken and the following data were recorded:

Work Element F RF1 0.53 0.50 1.052 0.10 1.00 0.953 0.75 1.00 1.104 1.08 1.00 0.90

Because element 1 occurs only every other cycle, its average time per cycle must be half its average observed time. That is why F1 = 0.50 for that element. All others occur every cycle. What are the normal times for each work element and for the complete cycle?


Example H.2

The normal times are calculated as follows:

Work element 1: NT1 =




0.53(0.50)(1.50) = 0.28 minute

0.10(1.00)(0.95) = 0.10 minute

0.75(1.00)(1.10) = 0.83 minute

1.08(1.00)(0.90) = 0.97 minute

The normal time for the complete cycle is 2.18 minutes


Example H.3Management needs a standard time for the coffee cup packaging operation. Suppose that A = 0.15 of the normal time. What is the standard time for the coffee cup packaging operation, and how many cartons can be expected per 8-hour day?

For A = 0.15 of the normal time,

ST = 2.18(1 + 0.15) = 2.51 minutes/carton


Production standard = 480 minutes/day 2.51 minutes/carton

= 191 cartons/day

Application H.1Lucy and Ethel have repetitive jobs at the candy factory. Management desires to establish a time standard for this work for which they can be 95% confident to be within ± 6% of the true mean. Step 1: There are three work elements involved:

#1: Pick up wrapper paper and wrap one piece of candy

#2: Put candy in a box, one at a time

#3: When the box is full (4 pieces), close it and place on conveyor


Application H.1Step 2:Timing the elements. Select an average trained

worker, Lucy will suffice.

Element

Initial Observation Cycle Number, Minutes

1 2 3 4 5 6 7 8 9

Wrap #1: .10 .08 .08 .12 .10 .10 .12 .09 .11

Pack #2: .10 .08 .08 .11 .06 .98* .17 .11 .09Close #3: .27 ... ... ... .34 ... ... ... .29

Standard Dev,

* Lucy had some rare and unusual difficulties; don't use this observation.


Application H.1

Element

Initial Observation Cycle Number, Minutes

1 2 3 4 5 6 7 8 9

Wrap #1: .10 .08 .08 .12 .10 .10 .12 .09 .11Pack #2: .10 .08 .08 .11 .06 .98* .17 .11 .09Close #3: .27 ... ... ... .34 ... ... ... .29

SelectTime, t

Standard Dev,

0.1 0.015

0.1 0.03295

0.3 0.03606

2 21.96 0.032950.06 0.10

116znp t


Application H.1Step 4: Setting the standard.

a. The analyst subjectively assigns a rating factor.b. Determine the normal time (NT) for each work element, given the following rating factors.

.10

.10

.30

0.12

0.09

0.06

c. Determine the normal time for the cycle.

NTC = NT = 0.12 + 0.09 + 0.06 = 0.27 minute.


Element Select Time, t Frequency Rating Factor Normal Time

Wrap #1: 1.00 1.2

Pack #2: 1.00 0.9

Close #3: 0.25 0.8

Element Frequency Rating Factor Normal Time

Wrap #1: 1.00 1.2

Pack #2: 1.00 0.9

Close #3: 0.25 0.8

Application H.1

.10

.10

.30

0.12

0.09

0.06

ST = NTC(1 + A) = 0.27(1.185) = 0.32 minute.


d. Determine the proportion of the normal time to be added for allowance, and then calculate standard time ST. Let the allowance be 18.5% of the normal time (A = 0.185).

Overall Assessment• Most frequently used method for setting time

standards

• Qualified analysts can typically set reasonable standards• Not appropriate for “thinking” jobs• Not appropriate for non-repetitive jobs• Inexperienced persons should not conduct time

studies• Workers may object to judgment and

subjectivity involvedCopyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 17

Elemental Standard Data Approach• Useful for processes with high divergence, but when a high

degree of similarity exists for basic elements of work for different services and processes

– Time standards are developed for common work elements

– Study results are stored in a database for later use in establishing standards for jobs requiring those elements

– Allowances must still be added

– An equation may be used to account for the effect on time required by certain variable characteristics of the jobs

• This approach reduces the number of time studies needed, but does not eliminate time studies


Predetermined Data Approach

• Break each work element into micromotions: reach, move, disengage, apply pressure, grasp, position, release, and turnStep 1: Break each work element into its basic

micromotions Step 2: Find the proper tabular value of time for each

micromotionStep 3: Normal times of micromotions are added for the

taskStep 4: Adjust for allowances to arrive at the standard

timeCopyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 19

MTM PREDETERMINED DATA FOR THE MOVE MICROMOTION

Time TMU Wt. AllowanceDistance Moved

(in.)A B C

Hand in Motion

BWt. (lb) Up to

Dynamic Factor

Static Constant (TMU)

3/4 or less 2.0 2.0 2.0 1.7

1 2.5 2.9 3.4 2.3 2.5 1.00 0

2 3.6 4.6 5.2 2.9

3 4.9 5.7 6.7 3.6 7.5 1.06 2.2

4 6.1 6.9 8.0 4.3

5 7.3 8.0 9.2 5.0 12.5 1.11 3.9

6 8.1 8.9 10.3 5.7

7 8.9 9.7 11.1 6.5 17.5 1.17 5.6

8 9.7 10.6 11.8 7.2

9 10.5 11.5 12.7 7.9 22.5 1.22 7.4




• Advantages

– Standards can be set for new jobs– Work methods can be compared without a

time study

– Greater consistency of results

– Reduces the problem of biased judgment



• Disadvantages – Impractical for jobs with low repeatability

– Data may not reflect the actual situation in a specific plant.

– Performance time variations can result from many factors.

– Actual time may depend on the specific sequence of motions.

– Considerable skill is required to achieve good standards.


Work Sampling Method

• Work sampling method – Estimating the proportion of time spent by

people and machines on activities, based on a large number of observations.

– Proportion of observations in which the activity occurs is assumed to be the proportion of time spent on the activity in general


Work Sampling Method Step 1. Define the activities

Step 2. Design the observation form

Step 3. Determine the length of the study

Step 4. Determine the initial sample size

Step 5. Select random observation times using a random number table

Step 6. Determine observer schedule

Step 7. Observe the activities and record the data

Step 8. Decide whether further sampling is requiredCopyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 24

Work Sampling Method • Select a sample size so that the estimate of the proportion

of time spent on a particular activity that does not differ from the true proportion by more than a specified error, so

eppep ˆˆˆ

where= sample proportion (number of occurrences divided by the sample size)

e = maximum error in the estimate

p̂


Work Sampling Method • As the binomial distribution applies, the maximum

error of the estimate is: nppze ˆˆ

1

wheren = sample sizez = number of standard deviations needed to achieve the desired confidence

Solving for n

ppezn ˆˆ

1

2


Work Sampling Method

nppze ˆˆ

1

Confidence interval

Probability that trueproportion will fall

within confidence interval

ep ˆ p̂ epˆ


Example H.4• The hospital administrator at a private hospital is

considering a proposal for installing an automated medical records storage and retrieval system.

• To determine the advisability of purchasing such a system, the administrator needs to know the proportion of time that registered nurses (RNs) and licensed vocational nurses (LVNs) spend accessing records.

• Currently, these nurses must either retrieve the records manually or have them copied and sent to their wards.

• A typical ward, staffed by eight RNs and four LVNs, is selected for the study.


Example H.4

a. The hospital administrator estimates that accessing records takes about 20 percent of the RNs’ time and about 5 percent of the LVNs’ time. The administrator wants 95 percent confidence that the estimate for each category of nurses falls within + 0.03 of the true proportion. What should the sample size be?


Example H.4b. The hospital administrator estimates that the annual

amortization cost and expenses for maintaining the new automated medical records storage and retrieval system will be $150,000. The supplier of the new system estimates that the system will reduce the amount of time the nurses spend accessing records by 25 percent. The total annual salary expense for RNs in the hospital is $3,628,000, and for LVNs it is $2,375,000. The hospital administrator assumes that nurses could productively use any time saved by the new system.

Should the administrator purchase the new system?Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

H - 30

124 258 223 83 688

28 251 46 19 344

Example H.4

Activity

Accessing records

Attending to patients

Other support

activitiesIdle or break

Total observations

RN

LVN


Example H.4

a. Using estimates for the proportion of time spent accessing records of 0.20 for RNs and 0.05 for LVNs, an error of ± 0.03 for each, and a 95 percent confidence interval (z = 1.96), the following sample sizes are:

2

61.96 0.20 0.80 33

80.0

n

2

21.96 0.05 0.95 33

00.0

n

RN:

LVN:


Example H.4• Eight RNs and four LVNs can be observed on each trip.

Therefore, 683/8 = 86 (rounded up) trips are needed for the observations of RNs, and only 203/4 = 51 (rounded up) trips are needed for the LVNs.

• Thus, 86 trips through the ward will be sufficient for observing both nurse groups.

• This number of trips will generate 688 observations of RNs and 344 observations of LVNs.

• It will provide many more observations than are needed for the LVNs, but the added observations may as well be recorded as the observer will be going through the ward anyway.


Example H.4Confidence Interval

Workgroup Total Obs.

Activity Obs.

Proportion of Total Lower Upper

Required Sample

Size

RN 688 124 0.1802 0.15151 0.2090 631

LVN 344 28 0.0814 0.05250 0.1113 320

Because the nurses will not be using the system all the time, we accept the supplier’s estimate of 25 percent to determine the value of the time spent accessing records. Estimated annual net savings from the purchase of the automatic medical records storage and retrieval system are:

Net savings = 0.25[($3,628,000)(0.18) + ($2,375,000)(0.08)] - $150,000= $60,760


Application H.2• Major League Baseball (MLB) is concerned about excessive game

duration.• Batters now spend a lot of time between pitches when they leave

the box to check signals with coaches, and then go through a lengthy routine including stretching and a variety of other actions.

• Pitching routines are similarly elaborate. • In order to speed up the game, it has been proposed to prohibit

batters from leaving the box and to prohibit pitchers from leaving the mound after called balls and strikes.

• MLB estimates the proportion of time spent in these delays to be 20% of the total game time.

• Before they institute a rules change, MLB would like to be 95% confident that the result of a study will show a proportion of time wasted that is accurate within ± 4% of the true proportion.


Application H.2Steps 1 and 2. Define the activities and design the

observation form.Step 3. Determine the length of the study. Suppose

that ten games (or 32 hours) are appropriate.Step 4. Determine the initial sample size.

21.96 0.20 1 0.20

0.04385

n

Steps 5 and 6. Determine the observer schedule.


385 observat12.03 ions por er 1 r32

2 hou

observations

Application H.2Step 7. Observe the activities and record the data. You

find 96 unacceptable delays for pitchers and 46 unacceptable delays for batters.

Step 8. Check to see whether additional sampling is required.

21.96 0.25 1 0 45.25 observation0 s

0.04

21.96 0.12 1 0 25.12 observation4 s

0.04

For pitchers:

For batters:

n

Thus 65 more observations are needed (450 – 385)Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 37

n

Overall Assessment of Work Sampling

• Advantages– No special training required of observers– Several studies can be conducted simultaneously– More economical for jobs having long cycle times – Workers prefer this method to time studies

• Disadvantages– A large number of observations are required– Usually not used for repetitive, well-defined jobs– Workers may increase quantity at the expense of

qualityCopyright ©2013 Pearson Education, Inc. publishing as Prentice Hall H - 38

Managerial Considerations

• Managers should carefully evaluate work measurement techniques to ensure that they are used in ways that are consistent with the firm’s competitive priorities

• Technological changes– Increased automation– There is less need to observe and rate worker

performance, because work is machine paced– Work sampling may be electronically monitored


Solved Problem 1For a time study of a health insurance claims-adjusting process, the analyst uses the continuous method of recording times. The job is divided into four work elements. The performance rating factors, RF, and the continuous method recorded times, r, for each work element are shown on the next slide.

a. Calculate the normal time for this job.b. Calculate the standard time for this job, assuming that the

allowance is 20 percent of the normal time.c. What is the appropriate sample size for estimating the

time for element 2 within ± 10 percent of the true mean with 95 percent confidence?


Operation: Insurance claim processing Date: 10/09/12 Observer: Jennifer Johnson

Work Element

Observations

t RF 1 2 3 4 5

1.Check form completion and signatures

t

r

2.Enter claim amounts, check math

t

r

3.Determine proportion of claim to be disallowed

t

r

4.Generate form letter, enter data for check

t

r

Solved Problem 1

0.50

0.50

0.52 1.1 0.0570

0.24 1.2 0.0742

0.65 1.2 0.0791

1.20 0.9 0.1000

0.20

0.70

0.751.45

1.30

2.75

0.55

3.30

0.15

3.45

0.60

4.05

1.20

5.25

0.45

5.70

0.25

5.95

0.55

6.50

1.10

7.60

0.60

8.20

0.35

8.55

0.70

9.25

1.10

10.35

0.50

10.85

0.25

11.10

0.65

11.75

1.30

13.05


Solved Problem 1

•


Solved Problem 1The normal times are calculated as:

RFNT1 FtWork element 1: NT1 = (0.52)(1)(1.1) = 0.572 minute

Work element 2: NT2 = (0.24)(1)(1.2) = 0.288 minute

Work element 3: NT3 = (0.65)(1)(1.2) = 0.780 minute

Work element 4: NT4 = (1.20)(1)(0.9) = 1.080 minutes

Total = 2.720 minutes


Solved Problem 1b. Standard time = (Normal time per cycle)(1.0 +

Allowances), or ST = NTC(1.0 + A) = 2.72(1.0 + 0.2)= 3.264 minutes

c. The appropriate sample size for 95 percent confidence that the select time for work element 2 is within 10 percent of the true mean is:

2

tpzn 2

24007420

100961

..

.

.

= 36.72, or 37 observations


Solved Problem 2A library administrator wants to determine the proportion of time the circulation clerk is idle. The following information was gathered randomly by using work sampling:

DayNumber of Time

Clerk BusyNumber of Time

Clerk IdleTotal Number of

ObservationsMonday 8 2 10Tuesday 7 1 8Wednesday 9 3 12Thursday 7 3 10Friday 8 2 10Saturday 6 4 10

If the administrator wants a 95 percent confidence level and a degree of precision of ± 4 percent, how many more observations are needed?


Solved Problem 2

ˆ 15 / 6 .20 0 5p

The total number of observations made was 60. The clerk was observed to be idle 15 times. The initial estimate of the sample proportion is:

2

2 1e

ppzn ˆˆ 22

040750250961

....

450.19, or 451 observations

As 60 observations have already been made, an additional 391 are needed.


The required sample size for a precision of 4 percent is:


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Measuring Output Rates Supplement H Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall H - 01.

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