operation managrement time management manpower calculations

1. © Wiley 2010 1
Chapter 11 – Work System
Design
Operations Management
by
R. Dan Reid & Nada R. Sanders
4th Edition © Wiley 2010

2. © Wiley 2010 2
Learning Objectives
 Describe the elements of work system
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

3. © Wiley 2010 3
Learning Objectives – con’t
 Describe how to do work sampling
 Develop standard times
 Show how to use work standards
 Describe compensation plans
 Describe learning curves

4. © Wiley 2010 4
Designing a Work System
Designing a work system is part of developing an
operations strategy
 Effective operations strategy provides structure for
company productivity
 The work system includes:
 Job design
 Work measurements
 Worker compensation

5. © Wiley 2010 5
Design a Job
 Job Design specifies work activities of an
individual or group
 Jobs are designed by answering questions
like:
 What is the job’s description?
 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?

6. © Wiley 2010 6
Additional Job Design Factors
 Technical feasibility:
 The job must be physically and mentally doable
 Economic feasibility:
 Cost of performing the job is less than the
value it adds
 Behavioral feasibility:
 Degree to which the job is intrinsically
satisfying to the employee

7. © Wiley 2010 7
Machines or People - Should
the Job Be 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

8. © Wiley 2010 8
Levels of Labor Specialization
 Level of labor specialization can:
 Reduce the employee’s scope of expertise (higher
levels of specialization)
 Increase the employee’s scope of expertise (lower
levels of specialization)
 Work satisfaction helps define level of
specialization
 Specialization can result in employee boredom

9. © Wiley 2010 9
Specialization: Management’s View
Advantages:
 Readily available labor
 Minimal training
required
 Reasonable wages
costs
 High productivity
Disadvantages:
 High absenteeism
 High turnover rates
 High scrap rates
 Grievances filed

10. © Wiley 2010 10
Specialization: Employee’s 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

11. © Wiley 2010 11
Eliminating Employee Boredom
 Job enlargement
 Horizontal expansion of the job through increasing the
scope of the work assigned.
 Job enrichment
 Vertical expansion of the job through increased worker
responsibility
 Adding work planning or inspection to a routine
assembly task
 Job rotation
 Shifting of cross trained workers to other tasks
 Broadens understanding and can reduce fatigue

12. © Wiley 2010 12
Team Approach to Job Design
 Problem-solving teams:
 Small groups, trained in problem-solving techniques.
Used to identify, analyze, & propose solutions to
workplace problems
 Special-purpose task forces:
 Highly-focused, short-term teams with a focused
agenda (often cross-functional)
 Self-directed or self-managed teams:
 Team members work through consensus to plan,
manage, & control their assigned work flow

13. © Wiley 2010 13
The Alternative Workplace
 An alternative workplace brings work to the worker rather
than the worker to the workplace
 Alternative workplaces are made possible by
technologies like email, e-networks, cell phones, & video
conferencing. Current situation:
 More than 30 million employees work in alternative workspaces
 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

14. © Wiley 2010 14
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

15. © Wiley 2010 15
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, then
follow up on the changes or new operation

16. © Wiley 2010 16
Methods Analysis at FEAT Company: The methods 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. Picks up wire in left hand and
moves it to the terminal
2. Simultaneously picks up
solder iron in right hand and
moves to the terminal
3. Solders wire to terminal and
replaces solder iron in holder
4. Solders terminal #1, then
#2 - #6, going right to left

17. © Wiley 2010 17
Analyst’s Recommendations: A. Maize reviews the 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.

18. © Wiley 2010 18
The Work Environment
 Working conditions can effect worker 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

19. © Wiley 2010 19
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, using appropriate processes and tools
to complete a specific job, allowing time for
personal fatigue, and unavoidable delays

20. © Wiley 2010 20
Work Measurement
 Standard time is used in:
 Costing the labor component of products
 Tracking employee performance
 Scheduling & planning required resources

21. © Wiley 2010 21
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

22. © Wiley 2010 22
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

23. © Wiley 2010 23
Doing a Time Study
 Need to determine how many observations are required
 Involves determining the level of accuracy required and confidence
level desired
 n: number of observations of an element that are needed
 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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24. © Wiley 2010 24
Pat’s Pizza Place: Pat hires an analyst to determine a 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.
 The analyst must calculate the observations for each element 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.
ns
observatio
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A B C D E
Example 11.3 Pat's Pizza Place
Standard Deviation Mean Observed Revised Observed
Work Element (minutes) Time (minutes) Time (minutes) # Observations
1. Get ball of dough 0.010 0.12 0.15 11
2. Flatten dough 0.030 0.25 0.25 23
3. Spin and toss dough 0.040 0.50 0.60 10
4. Place dough on counter 0.005 0.12 0.15 3
5. Pour sauce on formed dough 0.035 0.30 0.30 21
6. Place grated cheese on top 0.025 0.25 0.28 16
7. Place pepperoni on sauce 0.030 0.24 0.28 25

25. © Wiley 2010 25
Other Time Factors Used in
Calculating Standard Time
 The normal time (NT) is the mean observed
time multiplied by the performance rating
factor (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.

26. © Wiley 2010 26
Other Time Factors Used in
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:
(NT)(AF)
ST
117.6%
1.176
0.15
1
1
PFD
1
1
AF Work
ed
Tme
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

27. © Wiley 2010 27
Calculating Normal Time and
Standard Time at Pat’s Pizza
 The standard time for preparing a large, hand-tossed 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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A B C D E F
Example 11.4 Calculating Standard Time for a Hand-Tossed Cheese and Pepperoni Pizza
Revised Observed Performance Rating Frequency Normal Time Standard Time
Work Element Time (minutes) Factor (minutes) (minutes)
1. Get ball of dough 0.15 0.90 1 0.135 0.159
2. Flatten dough 0.25 1.00 1 0.250 0.294
3. Spin and toss dough 0.60 0.85 1 0.510 0.600
4. Place dough on counter 0.15 1.10 1 0.165 0.194
5. Pour sauce on formed dough 0.30 1.20 1 0.360 0.423
6. Place grated cheese on top 0.28 1.00 1 0.280 0.329
7. Place pepperoni on sauce 0.28 0.95 1 0.266 0.313
Total Time 1.966 2.312

28. © Wiley 2010 28
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

29. © Wiley 2010 29
Work Sampling Procedures
1. Identify the worker or machine to be sampled
2. Define the activities to be observed
3. Estimate the sample size based on level of accuracy and
confidence level
4. Develop the random observation schedule. Make
observations over a time period that is representative of
normal work conditions
5. Make you observations and record the data. Check to see
whether the estimated sample size remains valid
6. Estimate the proportion of the time spent on the given
activity

30. © Wiley 2010 30
Work Sampling Example: We are interested in 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.
 Step 1 – We need to estimate the number of observations needed to provide
an estimate with 97% confidence (z=2.17), and the resulting estimate will be
within 5% of its true value. We use
 Step 2 – Based on the first 30 observations the secretary was making travel
reservations 6 times (6 out of 30 observations = 0.2). With this new estimate,
recalculate the sample size needed .
 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 in
house travel agency
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31. © Wiley 2010 31
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?

32. © Wiley 2010 32
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

33. © Wiley 2010 33
Learning Curves
 When the number of times the task is
repeated doubles, the time per task
reduces as shown in the graph
 With an 85% learning curve rate, the
2nd time a task is done will take 85%
of the 1st time.
 The 4th time will take 85% of the 2nd
 If an employee took 12 hours to
complete an initial task, how long will
the 16th time take (4th doubling)?
T x Ln = time required to
perform a task the nth time
T = the time required to
perform the task the first
time
L = the rate of learning
n = the number of times the
task has doubled
hours
6.26
(.85)
x
12
task
16th
for
Hours 4



34. © Wiley 2010 34
Work System Design within
OM: How it all fits together
 Work system design includes job design, methods
analysis, and work measurement. Manufacturing or
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
company’s total quality management (TQM) focus.

35. © Wiley 2010 35
WSD: How it all fits together
con’t
 Work measurement techniques allow a company to develop
standards to use as a basis for evaluating the cost and 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.

36. © Wiley 2010 36
Work System Design Across
the Organization
 Work system design affections functional
areas throughout the organization
 Accounting calculates the cost of products
manufactured, variances between planned and
actual costs as well as operational efficiency
 Marketing uses work system design as the
bases for determining led time

37. © Wiley 2010 37
Work System Design Across
the Organization – con’t
 Information systems uses estimates of job
duration and resources in the software for
scheduling and tracking operations
 Human resources uses work sampling to
establishes and validate hiring criteria

38. © Wiley 2010 38
Chapter 11 Highlights
 Work system design involves job design, methods or 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.

39. © Wiley 2010 39
Chapter 11 Highlights – con’t
 Methods or process analysis is concerned with how the 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.

40. © Wiley 2010 40
Chapter 11 Highlights – con’t
 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.

41. © Wiley 2010 41
Chapter 11 Highlights – con’t
 Standard times are used to compare alternative processes, 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.

42. Chapter 11 Homework Hints
 11.5: calculate normal time (NT)
 11.6: use NT from 11.5 and allowance factor—job 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 factor—time 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.