1. Chapter 4 Estimating and Reducing Labor Costs

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

3. 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

4. Measures of Labor Productivity

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

6. Lifecycle Demand Trajectory for Xooters

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

8. 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

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

10. 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

11. 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

12. 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

13. 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