L03_LaborCosts_After - Lecture 03 Estimating and Reducing...

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Slide 1 Lecture 03 Estimating and Reducing Labor Costs
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Slide 2 Le a rning  O b je c tive s Understand the difference between efficiency and utilization Analyze labor content and utilizations Introduce Gantt chart Understand line balancing techniques Understand different capacity expansion choices
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Slide 3 S o m e  Te rm ino lo g ie s Design capacity : maximum output rate or service capacity an operation,  process, or facility is designed for. Effective capacity : design capacity minus allowances such as personal  time, maintenance, and scrap. Actual output : rate of output actually achieved   cannot exceed effective  capacity. Efficiency = Actual output Effective capacity Actual output Design capacity Utilization =
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Slide 4 Utilization and Labor Productivity
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Slide 5 Department of Public Safety An applicant comes every 4 minutes Task 1 is done while in the waiting room The size of the waiting room is unlimited Workers are paid $25 an hour The fee per applicant remains unchanged Task Description Duration (in minutes) 1 Fill out application 5 2 Receive and review application 1 Check driving record 4 4 Traffic rules test 3 5 Eye test 3 6 Photograph 2 Receive renewal fee 2 8 Issue license 4 Demand rate = 15 appl/hr
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Slide 6 Process Flow Diagram   One Person for Each Task Fill out  application Fill out  application Check  driving  record Check  driving  record Eye test Eye test Applicants  need new  license Traffic rules  test Traffic rules  test (Waiting Room) (Corina) (Alberto) Waiting  applicants Receive and  review  application Receive and  review  application Photograph Photograph Receive  renewal fee Receive  renewal fee Issue license Issue license Waiting  applicants (Ben) (Daniel) (Erin) (Fancisco) (Gabby) Waiting  applicants Waiting  applicants Waiting  applicants Waiting  applicants Waiting  applicants Applicants  with new  license
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Slide 7 Back to DPS:  One Person Each Task   Performance  Resource Activity times  (in mins) Capacity  (appl / hour) Idle time  (min/appl) Utilization Implied utilization WR 5 infinite -- -- -- A 1 60 3 25% 25% B 4 15 0 100% 100% C 3 20 1 75% 75% D 3 20 1 75% 75% E 2 30 2 50% 50% F 2 30 2 50% 50% 4 15 0 100% 100% (A)  (B)  (C)  (D)  (E)  (F)  (G)  1min 4min 3min 3min 2min  2min 4min 5min Demand = 15 appl/hr Bottleneck(s) = B,G Process utilization = 100% (Actual) cycle time = Labor content = 60/15= 4min 1+4+3+3+2+2+4=19min/appl Direct cost of labor = X $25/15=$11.67/appl Rush order flow time = 5+1+4+3+3+2+2+4 =24min Total idle time = 3+1+1+2+2=9min/appl Average labor utilization = 19/(7X4) = 67.86% Flow rate = Demand rate = Process capacity = 15 appl/hr Contain  labor  content
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Slide 8 Task Allocation   Gantt Chart
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L03_LaborCosts_After - Lecture 03 Estimating and Reducing...

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