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System

Design

Operations Management

by

R. Dan Reid & Nada R. Sanders

4th Edition Wiley 2010

Wiley 2010

Learning Objectives

design and the objectives of each

element

Describe relevant job design issues

Describe methods analysis

Understand the importance of work

measurement

Describe how to do a time study

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Develop standard times

Show how to use work standards

Describe compensation plans

Describe learning curves

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Designing a work system is part of developing an

operations strategy

for company productivity

Job design

Work measurements

Worker compensation

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Design a Job

an individual or group

Jobs are designed by answering

questions like:

What is the purpose of the job?

Where is the job done?

Who does the job?

What background, training, or skills are required

to do the job?

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Factors

Technical feasibility:

Economic feasibility:

doable

Cost of performing the job is less than the

value it adds

Behavioral feasibility:

satisfying to the employee

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Automated?

Safety & risk of injury to workers

Repetitive nature of the task

(monotonous?)

Degree of precision required

Complexity of the task

Need for empathy, compassion, or other

emotional elements

Need for personal customer relationships

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Levels of Labor

Specialization

(higher levels of specialization)

Increase the employees scope of expertise

(lower levels of specialization)

specialization

Specialization can result in employee

boredom

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Specialization: Managements

View

Advantages:

Readily available

labor

Minimal training

required

Reasonable wages

costs

High productivity

Disadvantages:

High absenteeism

Grievances filed

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Specialization: Employees

View

Advantages:

Minimal

credentials

required

Minimal

responsibilities

Minimal mental

effort needed

Reasonable wages

Disadvantages:

Boredom

Little growth

opportunity

Little control over work

Little room for

initiative

Little intrinsic

satisfaction

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Eliminating Employee

Boredom

Job enlargement

Job enrichment

the scope of the work assigned.

Vertical expansion of the job through increased

worker responsibility

Adding work planning or inspection to a routine

assembly task

Job rotation

Broadens understanding and can reduce fatigue

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11

Design

Problem-solving teams:

techniques. Used to identify, analyze, &

propose solutions to workplace problems

Highly-focused, short-term teams with a focused

agenda (often cross-functional)

manage, & control their assigned work flow

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12

rather than the worker to the workplace

Alternative workplaces are made possible by

technologies like email, e-networks, cell phones, & video

conferencing. Current situation:

A survey at IBM reveals that 87% of alternative workplace

employees believe their effectiveness has increased significantly

Sun Microsystems gives many of its designers the option to work

at home

AT&T provides flexible workstations so workers can rotate in

and out as needed

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13

Methods Analysis

A detailed step-by-step analysis of how a

given job is performed

Can distinguish between value-added &

non-value-added steps

Analysis can revise the procedure to

improve productivity

After improvement, must revise the new

standard operating procedure

Follow-up to insure that changes actually

improve the operation

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14

Methods Analysis

Method analysis consists of:

1. Identify the operation to be analyzed

2. Gather all relevant information

3. Talk with employees who use the operation

4. Chart the operation

5. Evaluate each step

6. Revise the existing or new operation as needed

7. Put the revised or new operation into effect,

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15

analyst has been asked to review the transformer wiring

operation because of past quality problems from poor

solder joints. The solder operation sequence and the

workstation layout are shown below.

1.

2.

3.

4.

and moves it to the terminal

Simultaneously picks up

solder iron in right hand and

moves to the terminal

Solders wire to terminal and

replaces solder iron in holder

Solders terminal #1, then

#2 - #6, going right to left

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16

workplace layout and the present flow chart (below), and

recommends reversing the solder sequence from #6-#1,

which is less problematic for the right handed operator. He

schedules a follow up to insure that the new method has

fixed the quality problem.

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productivity, product quality, and worker

safety

Temperature, ventilation, noise, and lighting

are all factors in work system design

Congress passed OSHA in 1970 to mandate

specific safety conditions that must be met

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Work Measurement

how long it should take to do a job

Involves determining Standard Time

qualified worker, using appropriate

processes and tools to complete a

specific job, allowing time for personal

fatigue, and unavoidable delays

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Work Measurement

products

Tracking employee performance

Scheduling & planning required

resources

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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

workers performance

Step 6: Compute the normal time

Step 7: Compute the standard time

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decisions are made to assure desired

results:

# of observations to make

Desired level of accuracy

Desired level of confidence for the

estimated standard time

expressed as a % of the mean observed

times

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Involves determining the level of accuracy required and

confidence level desired

2

z s

n

a x

z: the number of normal standard deviations needed for desired

confidence

s: the standard deviation of the sample

a: desired accuracy or precision

x-bar: the mean of the sample observations

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23

standard time to prepare a large pepperoni and cheese

pizza. He takes 10 observations of the 7 elements and

calculates the mean time and the standard deviation per

element. He must then calculate the # of observations to

be within 5% of the true mean 95% of the time.

to determine how many additional observations must be

taken. The maximum number of 25 (in this case) for element

#7 means that an additional 15 observations must be made

and then the observed times are revised.

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Calculating Standard Time

observed time multiplied by the

performance rating factor (PRF)

The PRF is a subjective estimate of a

workers pace relative to a normal work

pace

The frequency of occurrence (F) is how

often the element must be done each

cycle.

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25

Calculating Standard Time

time allowed for personal, fatigue, and

unavoidable delays

Standard Time=normal time x allowance

factor, where:

1

1

1.176 117.6%

1 PFD 1 0.15

ST (NT)(AF)

AFTme Worked

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Standard Time at Pats Pizza

pepperoni 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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Methods

based on previously completed time studies,

stored in an organizations database.

Predetermined time data (e.g. MTM and MTS)

is a published database element time data

used for establishing standard times

the proportion of time a worker spends on an

activity

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1.

2.

3.

4.

5.

6.

Define the activities to be observed

Estimate the sample size based on level of accuracy

and confidence level

Develop the random observation schedule. Make

observations over a time period that is

representative of normal work conditions

Make you observations and record the data. Check to

see whether the estimated sample size remains valid

Estimate the proportion of the time spent on the

given activity

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estimating the proportion of time spent by secretaries

arranging and scheduling travel. We are considering the

possibility of bringing an on site travel agency to free up

secretaries from this time consuming task. We estimate

that the proportion might be as high as .50.

provide an estimate with 97% confidence

(z=2.17), and the resulting

0.5

estimate will be within 5% of its true value. We use

2

) 2.17 2

z )

n p 1 p

0.51 0.5 470.89 observations

e

0.05

making travel reservations 6 times (6 out of 30 observations = 0.2).

With this new estimate, recalculate the sample size needed .

2

2.17

n

0.21 0.2 302 observations

0.05

Final Step After making the 302 observations, the secretary was

making reservations 60 times or 19.9%. This estimate can now be

used to make the decision on savings that might result by

consolidating this task with an inhouse

travel agency

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30

Compensation

Compensation is the third part of work system design

hours worked) vs. output-based systems (pay based

on the number of units completed)

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?

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Worker Compensation

Systems cont

company achieves certain performance objectives

sharing of companys profits

than profits

Compensation system may undermine teamwork

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Learning Curves

is repeated doubles, the time per

task reduces as shown in the graph

the 2nd time a task is done will

take 85% of the 1st time.

T x Ln = time required to

2nd

perform a task the nth

time

T = the time required to

complete an initial task, how long

perform the task the first

time

will the 16th time take (4th

Hours

for 16th task 12 x (.85) 4 6.26 hours L = the rate of learning

doubling)?

n = the number of times the

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task has doubled

33

within OM: How it all fits

together

Work system design includes job design, methods

industrial engineers often do these activities. Job design

determines exactly how the product or service will be

done and is linked directly to product and process design.

Based on the type of product (standard or custom) and its

proposed process (mass-producing or producing one at a

time), a company determines the skills set needed by its

employees as well as the necessary equipment.

Method analysis provides a means for evaluating different

processes and materials, thus allowing a company to

focus on continuous improvement. This ties in directly

with a companys total quality management (TQM) focus.

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34

together cont

Work measurement techniques allow a company to develop

effectiveness of different methods and materials for building a

product or providing a service. These time standards provide a

time estimate to use as a basis for establishing detailed work

schedules and for determining long-term staffing levels. These

time estimates can be used as a basis for making delivery or

completion-time promises to customers. Standard times are

used to develop lead-time estimates, which are inputs for the

MRP (material requirement planning) system as well as the

MPS (master production schedule) process.

Work system design provides the means for setting standards

against which to compare new methods, new materials, and

new designs, assures that employees know how to do their

job, and provides the information needed by the company to

calculate its costs.

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Across the Organization

functional areas throughout the

organization

manufactured, variances between planned

and actual costs as well as operational

efficiency

Marketing uses work system design as the

bases for determining led time

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36

Across the Organization

cont

Information systems uses estimates

software for scheduling and tracking

operations

Human resources uses work sampling

to establishes and validate hiring

criteria

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37

Chapter 11 Highlights

process analysis and work measurement. Job design

specifies the work activities of an individual or group in

support of organizational objectives

Relevant job design issues include design feasibility, the

choice of human or machine, the use of teams, and the

location where the work is to be done. Technical

feasibility is the degree to which an individual or group of

individuals is physically and mentally able to do the job.

Economic feasibility is the degree to which the value of a

job adds and the cost of have the job done are profitable

for the company.

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38

Chapter 11 Highlights

cont

employee does the job. Methods analysis can also be used

to improve the efficiency of an operation.

Work measurement is used to determine standard times. A

standard time is how long it should take a qualified

operator, using the appropriate process, material, and

equipment, and working at a sustained pace, to do a

particular job. Standard times are used for product costing,

process and material evaluations, and for planning

workloads and staffing. Standard times are usually based

on time studies. Work sampling is used to estimate the

proportion of time that should be spent on an activity.

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39

Chapter 11 Highlights

cont

To do a time study, first identify the job then break the job into

work elements. Finally, determine the number of observations

needed and perform the observation.

Work sampling involves random observations of a worker. Each

time you observe the worker, you note what activity the worker is

doing. After numerous observations, you can project the

expected proportion of time the worker should spend on different

activities.

Standard times are developed with either time studies, elemental

time data, or predetermined time data. You learned how to

develop standard times using time studies. After conducting the

time study, you compute the mean observed time for each work

element. You compute the normal time for the work element by

multiplying the mean observed time by the performance rating

factor. You find the standard time for each work element by

multiplying the normal time by the allowance factor.

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40

Chapter 11 Highlights

cont

evaluate new materials or components, and evaluate individual

worker performance. Standards also allow you to determine

when a job should be completed or how many units can be done

in a period of time.

Worker compensation systems are either time-based or out-put

based. Time-based systems pay the employee for the number of

hours worked. Output-based systems pay the employee for the

number of units completed. Compensation schemes can be

based on either individual or group performance. and can be

based on individual or group performance.

Learning curves show the rate of learning that occurs when an

employee repeats the same task. Using learning curves, you can

estimate how long a particular task will take. It allows the

company to schedule better and calculate cost more accurately.

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41

Chapter 11 Homework

Hints

11.6: use NT from 11.5 and allowance factorjob time

[AFJOB] to calculate standard time (ST)

11.7: use the total ST from 11.6 to calculate the

number of units.

11.8: use NT from 11.5 and allowance factortime

worked [AFTIME WORKED] to calculate ST

11.9: use the total ST from 11.8 to calculate the

number of units.

11.10: check the book for help in finding other factors

to choose between the two models calculated above.

11.19: refer to example 11.6 and use table 11-9 for

data to calculate the time based on the learning curve.

Note that problems 5-10 are worth 5 points; 19 is worth

10 for a total of 40 points for the assignment.