To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Supplement I - Measuring Output Rates

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Work Standards Establishing prices and costs Establishing prices and costs Motivating workers Motivating workers Comparing alternative process designs Comparing alternative process designs Scheduling Scheduling Capacity planning Capacity planning Performance appraisal Performance appraisal

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Time Study Method Packaging Coffee Cups

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 1: Selecting Work Elements Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 1: Selecting Work Elements Work Element 1.Get two cartons 2.Put liner in carton 3.Place cups in carton 4.Seal carton and set aside Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 2: Timing the Elements StandardSelect Deviation,  Time, t Work Element(minutes)(minutes) 1.Get two cartons 2.Put liner in carton 3.Place cups in carton 4.Seal carton and set aside Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 2: Timing the Elements (10 observations) (10 observations) StandardSelect Deviation,  Time, t Work Element(minutes)(minutes) 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size n = [( )( )] z  p t 2 StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside n = [( )( )] z  p t 2 Example I.1 Desired Confidence (%)z

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1 Desired Confidence (%)z

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside n = [( )( )] Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside n = 9 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside n = 9 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside n = 9 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside  0.04 t n = [( )( )] 2 Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 3: Determining the Sample Size StandardSelectRequired Deviation,  Time, tSample Work Element(minutes)(minutes)Size 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Example I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard Work ElementtFRFNT 1.Get two cartons 2.Put liner in carton 3.Place cups in carton 4.Seal carton and set aside Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = 0.53(0.50)(1.05) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = 0.53(0.50)(1.05) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = 0.53(0.50)(1.05) = 0.28 minute Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside NT = t (F )(RF) Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Total2.18 NT = t (F )(RF) NTC =  NT Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Total2.18 NT = t (F )(RF) NTC =  NT Example I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Total2.18 ST = NTC (1 + A ) Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 ST = NTC (1 + A ) Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 ST = 2.18 ( ) Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 ST = 2.18 ( ) = 2.51 minutes/carton Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 Standard Time2.51 ST = 2.18 ( ) = 2.51 minutes/carton Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 Standard Time2.51 Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Packaging Coffee Cups Step 4: Setting the Standard (after 48 additional observations) (after 48 additional observations) Work ElementtFRFNT 1.Get two cartons Put liner in carton Place cups in carton Seal carton and set aside Allowance ( A ) = 15%Total2.18 Standard Time minutes/day 2.51 minutes/carton = 191 cartons/day Example I.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Predetermined Data

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Predetermined Data Table I.1 Time TMU Wt. Allowance DistanceHand inStatic MovedMotionWt. (lb)DynamicConstant (in.)ABCBUp toFactor(TMU) 3/4 or less

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Predetermined Data Time TMU Wt. Allowance DistanceHand inStatic MovedMotionWt. (lb)DynamicConstant (in.)ABCBUp toFactor(TMU) 3/4 or less Case and Description AMove object to other hand or against stop. BMove object to approximate or indefinite location. CMove object to exact location. Table I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Predetermined Data Table I.1 Time TMU Wt. Allowance DistanceHand inStatic MovedMotionWt. (lb)DynamicConstant (in.)ABCBUp toFactor(TMU) 3/4 or less

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Work Sampling Procedure Nurses Accessing Records

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Determining the Sample Size Nurses Accessing Records

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Confidence interval Probability that true proportion will fall within confidence interval p – e ^ p + e ^ p ^ e = z p (1 – p ) n ^ Figure I.1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% n =  p (1 – p ) ^  z 2 e Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% n = (0.20)(0.80)  Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% n = (0.20)(0.80)  Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% n = 683 observations of RNs Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining the Sample Size Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% n = 683 observations of RNs n = 203 observations of LVNs Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Recording the Observations Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Figure I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Recording the Observations Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN |||||||| |||| Figure I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Recording the Observations Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN |||||||||||||| |||||||| Figure I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Recording the Observations Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN |||||||| |||||| ||||||| |||| ||||||| Figure I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Recording the Observations Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Figure I.2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining Actual Proportions Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = Actual proportion for LVNs = Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining Actual Proportions Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 124 / 688 Actual proportion for LVNs = Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining Actual Proportions Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 124 / 688 Actual proportion for LVNs = 28 / 344 Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Determining Actual Proportions Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Verifying Sample Sizes Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Verifying Sample Sizes Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Example I.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Verifying Sample Sizes Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Example I.4 Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Verifying Sample Sizes Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Example I.4 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Use the Results—Automate? Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Example I.4 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Use the Results—Automate? Example I.4 Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Net savings = 0.25[($3,628,000)(0.18) + ($2,375,000)(0.08)] – $150,000 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Use the Results—Automate? Example I.4 Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Net savings = $60,760 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Use the Results - Automate? Example I.4 Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Net savings = $60,760 Net savings = 0.25[($3,628,000)(0.15) + ($2,375,000)(0.05)] – $150,000 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Nurses Accessing Records Use the Results—Automate? Example I.4 Activity AccessingAttending toOther supportIdle orTotal recordspatientsactivitiesbreakobservations RN LVN Time spent accessing records RN0.20 LVN0.05 Maximum error±0.03 Confidence level95% Net savings = $60,760 Net savings = $15,737 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN LVN

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Solved Problem 1 Time Study Method

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Selecting Work Elements

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Selecting Work Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r0.50 t r t r t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r0.50 t r0.70 t r t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r0.50 t r0.70 t r1.45 t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r0.50 t r0.70 t r1.45 t r2.75 Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r0.70 t r1.45 t r2.75 Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r1.45 t r2.75 Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r2.75 Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r t = 0.50 – 0.00 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t0.50 r t r t r t r t = 0.50 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t0.50 r t r t r t r t = 0.70 – 0.50 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t0.50 r t0.20 r t r t r t = 0.20 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t0.50 r t0.20 r t0.75 r t1.30 r Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t0.50 r t0.20 r t0.75 r t1.30 r t = 3.30 – 2.75 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Timing the Elements Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t0.20 r t0.75 r t1.30 r t = 0.55 Finding the observed time Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t0.20 r t0.75 r t1.30 r Timing the Elements Solved Problem 1

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Solved Problem 1 Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Timing the Elements

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Health Insurance Claims Figure I.3 Operation: Insurance claim processing Date: 10/07 Observer: Jennifer Johnson Work Element 1.Check form completion and signatures 2.Enter claim amounts, check math 3.Determine proportion of claim to be disallowed 4.Generate form letter, enter data for check Observations 12345tRF  t r t r t r t r Timing the Elements