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H Measuring Output Rates

For Operations Management, 9e by


PowerPoint Slides
Krajewski/Ritzman/Malhotra
by Jeff Heyl © 2010 Pearson Education
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H–1
Work Standards

 A work standard is the time required for a trained


worker to perform a task following a prescribed
method with normal effort and skill
 Used in the following ways:
 Establishing prices and costs
 Motivating workers
 Comparing alternative process designs
 Scheduling
 Capacity planning
 Performance appraisal

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Methods of Work Measurement

 The time study method


 The elemental standard data approach
 The predetermined data approach
 The work sampling method

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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
 z   
n    
 p  t 
where
n= required sample size
p= precision of the estimate as a proportion of the true value
t= select time for a work element
= standard deviation of representative observed times for a
work element
z = number of normal standard deviations needed for the
desired confidence
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H–4
The Time Study Method

 Typical 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

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H–5


Estimating the Sample Size in a
Time Study
EXAMPLE H.1
A coffee cup packaging operation has four work elements. A
preliminary study provided the following results:
Standard
Deviation, Select Time, Sample
Work Element , (min) t, (min) 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.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H–6
Estimating the Sample Size in a
Time Study Standard
Deviation, Select Time, Sample
Work Element , (min) t, (min) Size
1. Get two cartons 0.0305 0.50 5
SOLUTION 2. Put liner in carton 0.0171 0.11 10

For this problem, 3. Place cups in carton 0.0226 0.71 10


4. Seal carton and set aside 0.0241 1.10 10

2
 1.96  0.0305  
Work element 1: n =    = 9
 0.04  0.500  
2
 1.96  0.0171 
Work element 2: n =     = 58
 0.04  0 .11 
2
 1.96  0.0226  
Work element 3: n =    = 3
 0.04  0.71  
2
 1.96  0.0241 
Work element 4: n =    = 2
 0.04  1.10  

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The Time Study Method

Step 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
NT = t(F)(RF)

NTC = NT

ST = NTC(1 + A)

where
F = the frequency of occurrence
A = proportion of the normal time added for allowances

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

Work Element t F RF
1 0.53 0.50 1.05
2 0.10 1.00 0.95
3 0.75 1.00 1.10
4 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?

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Determining the Normal Time
SOLUTION
The normal times are calculated as follows:

Work element 1: NT1 = 0.53(0.50)(1.50) = 0.28 minute

Work element 2: NT2 = 0.10(1.00)(0.95) = 0.10 minute

Work element 3: NT3 = 0.75(1.00)(1.10) = 0.83 minute

Work element 4: NT4 = 1.08(1.00)(0.90) = 0.97 minute

The normal time for the complete cycle is 2.18 minutes

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Determining the Standard Time
EXAMPLE H.3
Management 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?

SOLUTION
For A = 0.15 of the normal time,

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

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Application H.1
Lucy 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. There are three work elements involved:

SOLUTION
Step 1: Selecting work elements

#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

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Application H.1
Step 2: Timing the elements. Select an average trained worker,
Lucy will suffice.

Initial Observation Cycle Number, Minutes Select Standard


Element 1 2 3 4 5 6 7 8 9 Time, t Dev, 
Wrap #1: .10 .08 .08 .12 .10 .10 .12 .09 .11
Pack #2: .10 .08 .08 .11 .06 .98* .17 .11 .09
Close #3: .27 ... ... ... .34 ... ... ... .29

* Lucy had some rare and unusual difficulties;


don't use this observation.

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Application H.1
Step 2: Timing the elements. Select an average trained worker,
Lucy will suffice.

Initial Observation Cycle Number, Minutes Select Standard


Element 1 2 3 4 5 6 7 8 9 Time, t Dev, 
Wrap #1: .10 .08 .08 .12 .10 .10 .12 .09 .11 0.1 0.015
Pack #2: .10 .08 .08 .11 .06 .98* .17 .11 .09 0.1 0.03295
Close #3: .27 ... ... ... .34 ... ... ... .29 0.3 0.03606

Step 3: Determining sample size. First calculate t for each


element in Step 2. Assume a 95% confidence interval,
with z = 1.96. The precision interval of ± 6% of the true
mean implies p = 0.06. To determine the sample size,
use the largest value of  / t .
2
 z    
2
 1.96  0.03295  
n             116
 p  t    0.06  0.10  

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Application H.1
Step 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.

Element Select Time, t Frequency Rating Factor Normal Time

Wrap #1: .10 1.00 1.2 0.12

Pack #2: .10 1.00 0.9 0.09

Close #3: .30 0.25 0.8 0.06

Note that for the third element, the frequency is 0.25


because closing the box occurs only once every four cycles.

c. Determine the normal time for the cycle.


NTC = NT = 0.12 + 0.09 + 0.06 = 0.27 minutes

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Application H.1
d. Subjectively 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 = .185).

Element Select Time, t Frequency Rating Factor Normal Time

Wrap #1: .10 1.00 1.2 0.12

Pack #2: .10 1.00 0.9 0.09

Close #3: .30 0.25 0.8 0.06

ST = NTC(1 + A) = 0.27(1.185) = 0.32 minutes

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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 because errors can result in
unreasonable standards
 Workers may object to judgment and
subjectivity involved

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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

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Predetermined Data Approach

 Break each work element into


micromotions: reach, move, disengage,
apply pressure, grasp, position, release,
and turn
Step 1: Break each work element into its basic
micromotions
Step 2: Find the proper tabular value of time for
each micromotion
Step 3: Normal times of micromotions are added
for the task
Step 4: Adjust for allowances to arrive at the
standard time

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Predetermined Data Approach

TABLE H.1 | MTM PREDETERMINED DATA FOR THE MOVE MICROMOTION


Time TMU Wt. Allowance
Distance Hand in
Wt. (lb) Dynamic Static Constant
Moved A B C Motion
Up to Factor (TMU)
(in.) B
3/4 or
2.0 2.0 2.0 1.7
less
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

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Predetermined Data Approach

 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

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Predetermined Data Approach

 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

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Work Sampling Method

 Results in a proportion of time spent doing


an activity, rather than a standard time for
the work
 Requires a large number of random
observations spread over the length of the
study
 Proportion of observations in which the
activity occurs is assumed to be the
proportion of time spent on the activity in
general

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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 required

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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
pˆ  e  pˆ  pˆ  e
where
p̂ = sample proportion (number of occurences
divided by the sample size)
e = maximum error in the estimate

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Work Sampling Method

 As the binomial distribution applies, the maximum


error of the estimate is

pˆ 1  pˆ 
ez
n
where
n = sample size
z = number of standard deviations needed to
achieve the desired confidence

 Solving for n
2
 z 
n    pˆ 1  pˆ 
e

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Work Sampling Method

pˆ 1  pˆ 
ez
n

Probability that true


proportion will fall
within confidence interval

pˆ  e p̂ pˆ  e

Confidence interval

Figure H.1 – Confidence Interval for a Work Sampling Study

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Using Work Sampling Data
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.

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Using Work Sampling Data
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?
b. 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. The pilot work sampling study resulted in the data
shown in Figure H.2. Should the administrator purchase the
new system?
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Using Work Sampling Data

Activity

Other
Accessing Attending support Idle or Total
records to patients activities break observations

RN 124 258 223 83 688

LVN 28 251 46 19 344

Figure H.2 – Results of the Initial Study

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Using Work Sampling Data
SOLUTION
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), we
recommend the following sample sizes:

2
 1.96  
RN: n    0.20 0.80   683
 0.03 
2
 1.96  
LVN: n    0.05 0.95   203
 0.03 

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Using Work Sampling Data
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.

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Using Work Sampling Data
b. Before using the estimates from the work sampling study,
we must be sure that additional sampling is not required.
Figure H.2 shows that RNs accessed records 124 times and
LVNs only 28 times. The computer output shows that the
proportion of working time spent on accessing records is
0.1802 for the RNs and 0.0814 for the LVNs. Thus, the
original estimates were off the mark. The computer uses the
new estimates for the proportions in the same formulas we
used in part (a) to revise the sample sizes. However, the new
sample sizes are smaller than those already used, so no
additional sampling is required. If the sample sizes were too
small for the proportions found, additional sampling would
have to be performed. In addition, the confidence interval
shows the range possible in the “true” proportions, based
on the results of the pilot study. For example, the actual
proportion of time spent by the RNs on accessing records
could be as low as 0.15 and as high as 0.21.

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Using Work Sampling Data

Confidence Interval
Required
Total Activity Proportion
Workgroup Sample
Obs. Obs. of Total Lower Upper
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

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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.

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Application H.2
SOLUTION
Steps 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.
2
n  
1.96 
 0.201  0.20   385 observations
 0.04 

Steps 5 and 6. Determine the observer schedule.

385
 12.03 or 12 observations per hour
32

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Application H.2
Step 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.

For pitchers:
2

n  
1.96 
 0.251  0.25   450 observations
 0.04 
For batters:
2
n  
1.96 
 0.121  0.12   254 observations
 0.04 

Thus 65 more observations are needed (450 – 385)

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Overall Assessment

 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 quality

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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

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Solved Problem 1
For 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. Shown in
Figure H.3 are the performance rating factors, RF, and the
continuous method recorded times, r, for each work element.

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?

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Solved Problem 1

Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson

Observations
Work Element 1 2 3 4 5 t RF 

t 0.50 0.55 0.45 0.60 0.50 0.52 1.1 0.0570


1. Check form completion
and signatures r 0.50 3.30 5.70 8.20 10.85

t 0.20 0.15 0.25 0.35 0.25 0.24 1.2 0.0742


2. Enter claim amounts,
check math r 0.70 3.45 5.95 8.55 11.10

t 0.75 0.60 0.55 0.70 0.65 0.65 1.2 0.0791


3. Determine proportion of
claim to be disallowed r 1.45 4.05 6.50 9.25 11.75

t 1.30 1.20 1.10 1.10 1.30 1.20 0.9 0.1000


4. Generate form letter,
enter data for check r 2.75 5.25 7.60 10.35 13.05

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Solved Problem 1
SOLUTION
a. To get the normal time for this job, we must first determine
the observed time, t, for each work element for each cycle.
We calculate the time for each observation by finding the
difference between successive recorded times, r. For
example, the time for the fifth observation of the first work
element is the difference between the recorded time when
that element was completed and the time when the fourth
observation of the fourth work element was completed. With
no extreme variation in the observed times for the work
elements, they are representative of the process. All the data
can be used for calculating the average observed time,
called the select time, t, and the standard deviation of the
observed times, . The results of those calculations are
given in Figure H.3. Every work element occurs during every
cycle, so the frequency, F, equals 1.

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Solved Problem 1
The normal times are calculated as

NT1  t F RF 

Work 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

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Solved Problem 1
b. 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
 z    
2
 1.96  0.0742  
n       0.10  0.24  
 p  t  

= 36.72, or 37 observations

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

Number of Time Number of Time Total Number of


Day Clerk Busy Clerk Idle Observations
Monday 8 2 10
Tuesday 7 1 8
Wednesday 9 3 12
Thursday 7 3 10
Friday 8 2 10
Saturday 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?

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Solved Problem 2

SOLUTION
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 pˆ  15 / 60  0.25 . The required sample size for a
precision of 4 percent is

z 2 pˆ 1  pˆ  1.96  0.25 0.75 


2
n 
e 2
0.04 2
 450.19, or 451 observations

As 60 observations have already been made, an additional


391 are needed.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H – 46


Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. H – 47