Unit – 3

3.4 Work Measurement

 Work Measurement
 Work Measurement helps determine how
long it should take to do a job
 Involves determining Standard Time
 Standard time: the length of time a qualified
worker takes , using appropriate processes
and tools, to complete a specific job,
allowing time for personal fatigue and
unavoidable delays

2
 Work Measurement
 Standard time is used in:
 Costing the labor component of products
 Tracking employee performance
 Scheduling & planning required resources

3
 Setting Standard Times
Step 1: Choose the specific job to be studied
Step 2: Tell the worker whose job you will be studying
Step 3: Break the job into easily recognizable units
Step 4: Calculate the number of cycles you must observe
Step 5: Time each element, record data & rate the
worker’s performance
Step 6: Compute the normal time
Step 7: Compute the standard time

4
 How to do a Time Study
 When making a time study several decisions
are made to assure desired results:
 # of observations to make
 Desired level of accuracy
 Desired level of confidence for the estimated
standard time
 Desired accuracy level is typically expressed
as a % of the mean observed times

5
 Calculating Standard Time
 The normal time (NT) is the mean observed
time multiplied by the performance rating
factor (PRF)
 OT = sum of recorded times/number of observation
 NT = OT x PRF
 The PRF is a subjective estimate of a worker’s
pace relative to a normal work pace
 The frequency of occurrence (F) is how
often the element must be done each cycle.
6
 Calculating Standard Time
 The allowance factor (AF) is the amount of time
allowed for personal, fatigue, and unavoidable delays
 Standard Time=normal time x allowance factor,
where:

1 1
AFTme Worked    1.176  117.6%
1  PFD 1  0.15
ST  (NT)(AF)

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 Calculating Normal Time and
Standard Time at Pat’s Pizza
A B C D E F
12 Example 11.4 Calculating Standard Time for a Hand-Tossed Cheese and Pepperoni Pizza
13 Revised Observed Performance Rating Frequency Normal Time Standard Time
14 Work Element Time (minutes) Factor (minutes) (minutes)
15 1. Get ball of dough 0.15 0.90 1 0.135 0.159
16 2. Flatten dough 0.25 1.00 1 0.250 0.294
17 3. Spin and toss dough 0.60 0.85 1 0.510 0.600
18 4. Place dough on counter 0.15 1.10 1 0.165 0.194
19 5. Pour sauce on formed dough 0.30 1.20 1 0.360 0.423
20 6. Place grated cheese on top 0.28 1.00 1 0.280 0.329
21 7. Place pepperoni on sauce 0.28 0.95 1 0.266 0.313
22 Total Time 1.966 2.312

 The standard time for preparing a large, hand-tossed pizza is 2.312

minutes. This means that a worker can prepare 207 pizzas in an 8-
hour shift (480 minutes divided by 2.312 minutes)

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 Other Time Study Methods
 Elemental time data establishes standards based
on previously completed time studies, stored in an
organization’s database.
 Predetermined time data (e.g. MTM and MTS) is a
published database element time data used for
establishing standard times
 Reach, grasp, move, engage, insert, turn, etc.
 Work Sampling is a technique for estimating the
proportion of time a worker spends on an activity
9
 Compensation
Compensation is the third part of work system design
 Time-based plans (pay based on the number of hours
worked) vs. output-based systems (pay based on the
number of units completed)
 Group incentive plans: profit sharing & gain sharing
 Plans put part of a worker’s salary at risk
 Does the compensation system undermine teamwork?
 Does plan prevent free-riders not doing their fair share?
 Does the incentive plan encourage workers to support the long-
term health of the organization?

10
 Worker Compensation Systems –
con’t
 Group incentive plans reward employees when
company achieves certain performance objectives
 Profit sharing – a employee bonus pool based on
sharing of company’s profits
 Gain sharing – emphasizes cost reduction rather than
profits
 Plans put part of a worker’s salary at risk

 Compensation system may undermine teamwork

11
Learning Curve
 Based on the premise that people and
organizations become better at their tasks as
the tasks are repeated
 Time to produce a unit decreases as more
units are produced
 Learning curves typically follow a negative
exponential distribution
 The rate of improvement decreases over
time
12
 Learning Effect
Time per repetition

Number of repetitions

13
Learning Curve Effect
Cost/time per repetition

0 Number of repetitions (volume)

14
Learning Curves
T x Ln = Time required for the nth unit
T = unit cost or unit time of the first unit
L = learning curve rate
n = number of times T is doubled

First unit takes 10 labor-hours

70% learning curve is present
Fourth unit will require doubling twice — 1 to 2 to 4

Hours required for unit 4 = 10 x (.7)2 = 4.9 hours

15
Learning Curve Examples
Learning-
Curve
Improving Cumulative Slope
Example Parameters Parameter (%)
Model -T Ford Price Units produced 86
production
Aircraft Direct labor-hours Units produced 80
assembly per unit
Equipment Average time to Number of 76
maintenance replace a group of replacements
at GE parts
Steel Production worker Units produced 79
production labor-hours per
unit produced

16
Learning Curve Examples
Learning-
Curve
Improving Cumulative Slope
Example Parameters Parameter (%)
Integrated Average price per Units 72
circuits unit produced
Handheld Average factory Units 74
calculator selling price produced
Disk memory Average price per Number of bits 76
drives bit

Heart 1-year death rates Transplants 79

transplants completed

17
Uses of Learning Curves
Internal: labor forecasting, scheduling,
establishing costs and
budgets
External: supply chain negotiations
Strategic: evaluation of company and
industry performance,
including costs and pricing

18
Arithmetic Approach
 Simplest approach
 Labor cost declines at a constant rate, the
learning rate, as production doubles

Nth Unit Produced Hours for Nth Unit

1 100.0
2 80.0 = (.8 x 100)
4 64.0 = (.8 x 80)
8 51.2 = (.8 x 64)
16 41.0 = (.8 x 51.2)
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Logarithmic Approach
Determine labor for any unit, TN , by

TN = T1(Nb)

where TN = time for the Nth unit

T1 = hours to produce the first
unit
b = (log of the learning
rate)/(log 2)
= slope of the learning curve

20
Logarithmic Approach
Determine labor for any unit, TN , by

TN = T1(Nb)
Learning
where TN = time for(%)
the Nth unit b
Rate
T1 = hours to produce the first
unit 70 – .515
b = (log of the learning
75 – .415
rate)/(log 2)
= slope80
of the learning– .322
curve
85 – .234
90 – .152
21
Logarithmic Example
Learning rate = 80%
First unit took 100 hours

TN = T1(Nb)
T3 = (100 hours)(3b)
= (100)(3log .8/log 2)
= (100)(3–.322)
= 70.2 labor hours

22
Coefficient Approach
TN = T1C

where TN = number of labor-hours

required to produce the Nth unit
T1 = number of labor-hours
required to produce the first unit
C = learning-curve coefficient
found in a table

23
Learning-Curve Coefficients
70% 85%
Unit
Number
(N) Unit Time Total Time Unit Time Total Time
1 1.000 1.000 1.000 1.000
2 .700 1.700 .850 1.850
3 .568 2.268 .773 2.623
4 .490 2.758 .723 3.345
5 .437 3.195 .686 4.031
10 .306 4.932 .583 7.116
15 .248 6.274 .530 9.861
20 .214 7.407 .495 12.402
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Coefficient Example
First boat required 125,000 hours
Labor cost = $40/hour
Learning factor = 85%

TN = T1C
T4 = (125,000 hours)(.723)
= 90,375 hours for the 4th boat

90,375 hours x $40/hour = $3,615,000

TN = T1C
T4 = (125,000 hours)(3.345)
= 418,125 hours for all four boats

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Coefficient Example

Third boat required 100,000 hours

Learning factor = 85%

New estimate for the first boat

100,000
= 129,366 hours
.773

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Strategic Implications
To pursue a strategy of a steeper curve
than the rest of the industry, a firm can:
1. Follow an aggressive pricing policy
2. Focus on continuing cost reduction and
productivity improvement
3. Build on shared experience
4. Keep capacity ahead of demand

27
Industry and Company
Learning Curves
In
Co du
str
m yp
pa ric
Price per unit (log scale)

ny e
co
st
(c)
Loss
(b)
Gross profit (a)
margin

Accumulated volume (log scale)

28
Limitations of Learning Curves
 Learning curves differ from company to
company as well as industry to industry so
estimates should be developed for each
organization
 Learning curves are often based on time
estimates which must be accurate and
should be reevaluated when appropriate

29
Limitations of Learning Curves
 Any changes in personnel, design, or
procedure can be expected to alter the
learning curve
 Learning curves do not always apply to
indirect labor or material
 The culture of the workplace, resource
availability, and changes in the process
may alter the learning curve

30
END

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