Operations Man 04

Operations
Management
Productivity
Transparency Masters to accompany Operations © 1998 by Prentice Hall, Inc.

Management, 5E (Heizer & Render) 3-1 A Simon & Schuster Company
Upper Saddle River, N.J. 07458
Measurement Problems
¨ Quality may change while the quantity of

inputs and outputs remains constant.
¨ External elements may cause an increase or
decrease in productivity.
¨ Precise units of measure may be lacking
Productivity
Productivity:
“production per unit of effort”
effectiveness of productive effort
Work organisation:
quantitative techniques to optimise
productivity
Productivity
Efficiency = Output / Unit Input
Efficiency is “doing the thing right”
Effectiveness is “doing the right thing”
Productivity is an efficiency measure usually quoted as:
Productivity = Output / Worker hours

Machine productivity = output / machine hours
or = output / capital invested
Energy productivity = output / kilowatt-hours
Productivity Variables
¨ Labor - contributes about 1/6 of the annual

increase
¨ Capital - contributes about 1/6 of the
annual increase
¨ Management - contributes about 2/3 of the
annual increase
Service Productivity
¨ Typically labor intensive

¨ Frequently individually processed
¨ Often an intellectual task performed by
professionals
¨ Often difficult to mechanize
¨ Often difficult to evaluate for quality
Productivity Growth 1971- 1992
5
4.5
4
% per year
3.5
3
United States
2.5 West Germany
2 Japan
1.5
1
0.5
0
Whole Economy Manufacturing

Management, 5E (Heizer & Render) A Simon & Schuster Company
Whirlpool
Productivity improved Costs were pared Wages increased
Parts per man hour Cost per unit of a spin pinion Average worker's annual cash compensation
115 $2.25 27000

110 26000
$2.00
105
$1.75 25000
100
95 $1.50 24000
1989 1990 1991 1989 1990 1991 1989 1990 1991

Management, 5E (Heizer & Render) A Simon & Schuster Company
Multi-Factor Productivity
Multi-Factor Productivity: which facility has the best productivity?

Stator Pty Ltd Rotor Pty Ltd
Workers 500 100
Labour costs $20,000/yr/worker $20,000/yr/worker
Equipment $1m $5m
Output 1500 1200

Multi-Factor Productivity
Stator Pty Ltd Rotor Pty Ltd
Normal (labour) productivity = 1500 / 500 = 1200 / 100

= 3 machines / worker = 12 machines / worker
Capital productivity = 1500 / $1m = 1200 / $5m

= 15 machines / $100k = 2.4 machines / $100k
Labour/capital multi-factor = 1500 / (500x(20k) + 1000k) = 1200 / (100x(2k) + 5000k)

productivity = 136 machines / $1m = 171 machines / $1m
Productivity Summary
• When analysing productivity the measures

must be appropriate
• These measures must be quantitative so

that changes can be monitored
• Quality should not be traded for

productivity
Work Study
Work Study
Work study
Method study Work measurement

Method Study
Method study is the systematic examination of the way work is

carried out currently. There are a number of stages through
which the study must progress:
1. Selection process
2. Data recording
3. Analysis and development of New Method
4. Brainstorming
Selection Process
The selection may be prompted by any of a number of factors:
• Management directive
• Consultant report
• Quality circle
• Perceived bottleneck
• Under-utilised equipment
• Poor quality
• Frequent failure
Data Recording
Process charts – five basic symbols are generally used
O Operation
 Transport
 Permanent storage
D Delay or temporary storage
□ Inspection
Example
Example
Example
Example
Layout Example
Layout Example
Layout Example
Travel Chart
Analysis of new method
•Have an open mind
•Employ a systematic approach
One technique used to force a systematic investigation of the data

is a set list of questions
What is being done? When is it done? Where is it being done?

Why is it being done? Why then? Why there?
What else could be done? When else could it be done? Where else could it be done?
What else should be done? When should it be done? Where should it be done?
How is it done? Who does it?

Why that way? Why that person?
How else can it be done? Who else might do it?
How else should it be done? Who should do it?
Brain Storming
Brainstorming may help in the development of new

ideas and methods
Installation of new method
The new method will need to be:
• Sold to all those concerned

• Implemented efficiently
• Supported with training
• Monitored to ascertain the level of improvement
Work Measurement
(Time and Motion Study
Reasons why work rates may need to be measured

• Scheduling and loading
• Line balancing and manning levels
• Method comparison
• Budget and cost control systems
• Estimation costs and loads
• Financial incentives
Time Study
Work element Observed time Rating

1 1.7 135
2 3.1 90
3 1.2 80
The rating for a qualified worker is 100

basic time = observed time (% rating)
for work element 1 = 1.7 x (135/100) = 2.3 minutes
Time and Motion Study
The observed time only covers actual work done. Other factors
• Relaxation allowance
• Contingency allowance for extra work
• Contingency allowance for delay
• Unoccupied time allowance
• Interference allowance
Time and Motion Study
Work content = Basic + Relax’n allowance + Contingency allowance (extra work)

(% of basic time) (% of basic time)
Standard time = Work content + Contingency allowance + Unoccupied allowance

(% of work content) (% of work content)
+ Interference allowance + ……...

(% of work content)
TMS
Observed time element
Rating Basic time (min)
(min)
1.3 90 1.17
4.2 110 4.62
8.6 115 9.89
9.3 85 7.9
5.2 125 6.5
• Relaxation 12%
• Extra work 3%
• Delay 4%
• Unoccupied time 3%
• Interference 2%
TMS
Work content = 30.08 + 3.61 + 0.9 = 34.59

Standard time = 34.59 + 1.38 + 1.04 + 0.69 = 37.7 minutes
Activity Based Sampling
1. Explain with the operators the reason for the study

2. Examine the process and identify activities
3. Carry lut a preliminary study of the activities to establish the
number of observation required for a full study (100 – 200 random
observations)
4. Determine the number of observations required to establish a given
degree of accuracy in the amount of down time observed
ABS
Number of observations required: N = 4P(100 – P) / (L2)

where P = percentage occurrence of desired activity
L = required percentage activity
If a preliminary study indicated that the machine was

productive for 35% of the time, and a full study was
required to give an answer of 2% accuracy on this figure.
Then N = 4 x 35(100 – 35)(2 x 2) = 2275

observations
Pre Determined Motion and Time
Study
Human movement is broken down and

classified
For each movement there is an associated time, usually
expressed as a Time Management Unit (TMU) where:
1 TMU = 0.00001 hours = 0.036

seconds
Nine Categories of MTM-X
Category Description Code

1 Get Reach to and grasp an object GE (easy)
GD
(difficult)
2 Put Move and position an object PE (easy)
PD (difficult
3 Regrasp Shift the grasp on an object R
4 Handle weight Apply force to move an object HW
5 Apply pressure Apply force where no movement is involved A
6 Eye action Eye focus and eye travel E
7 Step A pace in walking S
8 Bend down Bend the trunk BD
9 Arise from bend Straighten the trunk AB
MTM-X
GE GD PE PD
N 8 17 5 19
F 16 25 14 28
X 13 20 9 22
In addition to the initial classification, some may be qualified

by the distance of reach or weight:
F = far N = near X = variable

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Operations

Transparency Masters to accompany Operations © 1998 by Prentice Hall, Inc.

¨ Quality may change while the quantity of

Efficiency = Output / Unit Input

Efficiency is “doing the thing right”

Effectiveness is “doing the right thing”

Productivity is an efficiency measure usually quoted as:

Productivity = Output / Worker hours

¨ Labor - contributes about 1/6 of the annual

¨ Typically labor intensive

Whole Economy Manufacturing

Productivity improved Costs were pared Wages increased

115 $2.25 27000

Transparency Masters to accompany Operations © 1998 by Prentice Hall, Inc.

Multi-Factor Productivity: which facility has the best productivity?

Workers 500 100

Labour costs $20,000/yr/worker $20,000/yr/worker

Equipment $1m $5m

Output 1500 1200

Stator Pty Ltd Rotor Pty Ltd

Normal (labour) productivity = 1500 / 500 = 1200 / 100

Capital productivity = 1500 / $1m = 1200 / $5m

Labour/capital multi-factor = 1500 / (500x(20k) + 1000k) = 1200 / (100x(2k) + 5000k)

• When analysing productivity the measures

• These measures must be quantitative so

• Quality should not be traded for

Method study Work measurement

Method study is the systematic examination of the way work is

3. Analysis and development of New Method

The selection may be prompted by any of a number of factors:

Process charts – five basic symbols are generally used

D Delay or temporary storage

One technique used to force a systematic investigation of the data

What is being done? When is it done? Where is it being done?

How is it done? Who does it?

Brainstorming may help in the development of new

The new method will need to be:

• Sold to all those concerned

Reasons why work rates may need to be measured

Work element Observed time Rating

The rating for a qualified worker is 100

Work content = Basic + Relax’n allowance + Contingency allowance (extra work)

Standard time = Work content + Contingency allowance + Unoccupied allowance

+ Interference allowance + ……...

Work content = 30.08 + 3.61 + 0.9 = 34.59

1. Explain with the operators the reason for the study

Number of observations required: N = 4P(100 – P) / (L2)

If a preliminary study indicated that the machine was

Then N = 4 x 35(100 – 35)(2 x 2) = 2275

Human movement is broken down and

1 TMU = 0.00001 hours = 0.036

Category Description Code

In addition to the initial classification, some may be qualified

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