Chapter 4 Estimating and Reducing Labor Costs

A Labor Intense Process (Novacruz Case) Components Finished Xootrs Activity 1 13 minutes Activity 2 11 minutes Activity 3 8 minutes  

Xootr Task Durations Worker 1 Worker 2 Worker 3 Prepare cable 30 Assemble brake lever 110 Inspect & wipe off 95 Move cable 25 Trim and cap cable 59 Apply decal 20 Assemble washer 100 Place first rib 33 Insert in bag 43 Apply fork 66 Insert axles, cleats 96 Assemble carton 114 Assemble socket head 114 Insert rear wheel 135 Insert Xootr & manual 94 Steer pin nut 49 Place 2nd rib 84 Seal carton 84 Brake shoe, spring 66 Apply grip tape 56 Insert front wheel 100 Insert deck fasteners 75 Insert axle bolt 30 Tighten axle bolt 43 Tighten brake pivot 51 Assemble handle cap 118 792 seconds 648 seconds 450 seconds

Measures of Labor Productivity

Time to Process X Units Starting Empty What dictates flow from one step to the next?

Lifecycle Demand Trajectory for Xooters

Scaling Up to Higher Volumes/Increasing Efficiency Line balancing Takt time Line replicating Task specialization Adding workers

Balancing an Assembly Line (Fig 4.5) Cycle Time Before Line Balancing 1: Prepare cable 2: Move cable 3: Assemble washer 4: Apply fork, threading cable end 5: Assemble Socket head screws 6: Steer pin nut 7: Brake shoe, spring, pivot bolt 8: Insert front wheel 9: Insert axle bolt 10: Tighten axle bolt 11: Tighten brake pivot bolt 12: Assemble handle-cap 13: Assemble brake lever + cable 14: Trim and cap cable 15: Place first rib 16: Insert axles and cleats 17: Insert rear wheel 18: Place second rib and deck 19: Apply grip tape 20: Insert deck fasteners 21: Inspect and wipe-off 22: Apply decal and sticker 23: Insert in bag 24: Assemble carton 25: Insert Xootr and manual 26: Seal carton 900 800 12 700 10 11 9 20 600 19 8 500 18 Activity time [seconds] 7 26 400 6 17 25 300 5 15 16 24 200 4 23 14 22 2 3 100 1 13 21 Step 1 Step 2 Step 3 Cycle Time After Line Balancing 900 800 700 1 2 3 4 5 7 8 9 10 26 600 17 25 500 Activity time [seconds] 24 15 16 23 400 6 22 14 300 21 13 20 200 12 19 100 18 11 Step 1 Step 2 Step 3

Productivity Measures 1/2 Overall Performance Measures a1 Activity Time a2 a3 a4 1 2 3 4 Bottleneck =Idle Time

Productivity Measures 2/2 Labor Productivity Measures Labor Content=a1+a2+a3+a4 If one worker per resource: Idle Time=(a4-a1) +(a4-a2) +(a4-a3) Average labor utilization Cost of direct labor a1 Activity Time a2 a3 a4 1 2 3 4 Bottleneck =Idle Time

Key-points to remember: Work Methods Design Exercise Where process times & cost estimates quoted by production managers come from How to make labor related decisions pricing hiring Impact of process design on productivity Line balance Idle time Direct labor content Cost of direct labor Calculations: Determining resource requirements to support a volume target. Estimating direct labor content. Calculating direct manufacturing cost Adjusting for idle time The Importance of Process DESIGN Mechanics of a worker-paced line Mechanics of a work cell

What is the average labor content? 4.1 Consider a process consisting of three resources in a worker-paced line and a wage rate of $10 per hour. Assume there is unlimited demand for the product. How long does it take to produce 100 units starting with an empty system? What is the average labor content? What is the average labor utilization? What is the cost of direct labor? Resource Activity Time # Workers 1 10 2 6 3 16

What is the capacity of the assembly line? 4.5 Geneva Watch makes watches on a conveyor belt with six stations; one worker stands at each station and performs the following tasks: What is the capacity of the assembly line? What is the direct labor content for the processes on this line? What is the utilization of the worker in station B? How many minutes of idle time will the worker in station C have in one hour? What time will it be when the assembly line has processed 193 watches on any given day? A: Preparation 1 Heat stake lens Inspect bezel Clean switch Install Set switch 14 seconds 26 10 18/ 68 seconds total B: Preparation 2 Check switch Clean bezel Install module 23 seconds 12 25/ 60 seconds total C: Battery installation Install battery clip Heat stake clip Install 2 batteries 20 seconds 15 22 13/ 70 seconds total D: Band installation Install band Inspect band 45 seconds 13/ 58 seconds total E Packaging preparation Cosmetic inspection Final test 55/ 75 seconds total F: Watch packaging Place in box Place cover on box Insert owners manual 14 30/ 64 seconds total