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

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Presentation on theme: "To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Supplement."— Presentation transcript:

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

2 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

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

4 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

5 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

6 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

7 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 Example I.1

8 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 Example I.1

9 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 n = [( )( )] z  p t 2 Example I.1 Desired Confidence (%)z 901.65 951.96 962.05 972.17 982.33 992.58

10 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1 Desired Confidence (%)z 901.65 951.96 962.05 972.17 982.33 992.58

11 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1

12 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1

13 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 n = [( )( )] 1.96 0.0305 0.04 0.500 2 Example I.1

14 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 cartons0.03050.50 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 n = 9 Example I.1

15 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 cartons0.03050.509 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 n = 9 Example I.1

16 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 cartons0.03050.509 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 n = 9 Example I.1

17 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 cartons0.03050.509 2.Put liner in carton0.01710.11 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1

18 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 cartons0.03050.509 2.Put liner in carton0.01710.1158 3.Place cups in carton0.02260.71 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1

19 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 cartons0.03050.509 2.Put liner in carton0.01710.1158 3.Place cups in carton0.02260.713 4.Seal carton and set aside0.02411.10 1.96  0.04 t n = [( )( )] 2 Example I.1

20 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 cartons0.03050.509 2.Put liner in carton0.01710.1158 3.Place cups in carton0.02260.713 4.Seal carton and set aside0.02411.102 1.96  0.04 t n = [( )( )] 2 Example I.1

21 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 cartons0.03050.509 2.Put liner in carton0.01710.1158 3.Place cups in carton0.02260.713 4.Seal carton and set aside0.02411.102 Example I.1

22 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

23 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 cartons0.530.501.05 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = t (F )(RF) Example I.2

24 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 cartons0.530.501.05 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = t (F )(RF) Example I.2

25 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 cartons0.530.501.05 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = 0.53(0.50)(1.05) Example I.2

26 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 cartons0.530.501.05 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = 0.53(0.50)(1.05) Example I.2

27 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = 0.53(0.50)(1.05) = 0.28 minute Example I.2

28 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.95 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = t (F )(RF) Example I.2

29 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.10 4.Seal carton and set aside1.081.000.90 NT = t (F )(RF) Example I.2

30 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.90 NT = t (F )(RF) Example I.2

31 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 NT = t (F )(RF) Example I.2

32 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Total2.18 NT = t (F )(RF) NTC =  NT Example I.2

33 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Total2.18 NT = t (F )(RF) NTC =  NT Example I.2

34 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Total2.18 ST = NTC (1 + A ) Example I.3

35 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 ST = NTC (1 + A ) Example I.3

36 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 ST = 2.18 (1 + 0.15) Example I.3

37 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 ST = 2.18 (1 + 0.15) = 2.51 minutes/carton Example I.3

38 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 Standard Time2.51 ST = 2.18 (1 + 0.15) = 2.51 minutes/carton Example I.3

39 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 Standard Time2.51 Example I.3

40 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 cartons0.530.501.050.28 2.Put liner in carton0.101.000.950.10 3.Place cups in carton0.751.001.100.83 4.Seal carton and set aside1.081.000.900.97 Allowance ( A ) = 15%Total2.18 Standard Time2.51 480 minutes/day 2.51 minutes/carton = 191 cartons/day Example I.3

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

42 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 2.0 2.0 2.01.7 1 2.5 2.9 3.42.3 2.51.000 2 3.6 4.6 5.22.9 3 4.9 5.7 6.73.6 7.51.062.2 4 6.1 6.9 8.04.3 5 7.3 8.0 9.25.012.51.113.9 6 8.1 8.910.35.7 7 8.9 9.711.16.517.51.175.6 8 9.710.611.87.2 910.511.512.77.922.51.227.4

43 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 2.0 2.0 2.01.7 1 2.5 2.9 3.42.3 2.51.000 2 3.6 4.6 5.22.9 3 4.9 5.7 6.73.6 7.51.062.2 4 6.1 6.9 8.04.3 5 7.3 8.0 9.25.012.51.113.9 6 8.1 8.910.35.7 7 8.9 9.711.16.517.51.175.6 8 9.710.611.87.2 910.511.512.77.922.51.227.4 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

44 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 2.0 2.0 2.01.7 1 2.5 2.9 3.42.3 2.51.000 2 3.6 4.6 5.22.9 3 4.9 5.7 6.73.6 7.51.062.2 4 6.1 6.9 8.04.3 5 7.3 8.0 9.25.012.51.113.9 6 8.1 8.910.35.7 7 8.9 9.711.16.517.51.175.6 8 9.710.611.87.2 910.511.512.77.922.51.227.4

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

46 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

47 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

48 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

49 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

50 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)  1.96 2 0.03 Example I.4

51 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)  1.96 2 0.03 Example I.4

52 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

53 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

54 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

55 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

56 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

57 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

58 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 RN12425822383688 LVN 28251 4619344 Figure I.2

59 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 RN12425822383688 LVN 28251 4619344 Actual proportion for RNs = Actual proportion for LVNs = Example I.4

60 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 RN12425822383688 LVN 28251 4619344 Actual proportion for RNs = 124 / 688 Actual proportion for LVNs = Example I.4

61 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 RN12425822383688 LVN 28251 4619344 Actual proportion for RNs = 124 / 688 Actual proportion for LVNs = 28 / 344 Example I.4

62 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 RN12425822383688 LVN 28251 4619344 Actual proportion for RNs = 0.18 Actual proportion for LVNs = 0.08 Example I.4

63 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 RN12425822383688 LVN 28251 4619344 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

64 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 RN12425822383688 LVN 28251 4619344 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

65 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 RN12425822383688 LVN282514619344 WORKTOTALACTIVITYPROPORTION CONFIDENCE INTERVALREQUIRED GROUPOBS.OBS.OF TOTALLOWERUPPERSAMPLE SIZE RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

66 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

67 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

68 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

69 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

70 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

71 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 RN12425822383688 LVN282514619344 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 RN6881240.18020.151510.2090631 LVN344 280.08140.052500.1103320

72 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

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

74 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

75 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

76 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

77 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

78 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

79 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 r0.503.30 t r0.70 t r1.45 t r2.75 Solved Problem 1

80 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 r0.503.30 t r0.703.45 t r1.45 t r2.75 Solved Problem 1

81 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 r0.503.30 t r0.703.45 t r1.454.05 t r2.75 Solved Problem 1

82 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 r0.503.30 t r0.703.45 t r1.454.05 t r2.755.25 Solved Problem 1

83 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 r0.503.305.708.2010.85 t r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 Solved Problem 1

84 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 r0.503.305.708.2010.85 t r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 Finding the observed time Solved Problem 1

85 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 r0.503.305.708.2010.85 t r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 t = 0.50 – 0.00 Finding the observed time Solved Problem 1

86 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 r0.503.305.708.2010.85 t r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 t = 0.50 Finding the observed time Solved Problem 1

87 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 r0.503.305.708.2010.85 t r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 t = 0.70 – 0.50 Finding the observed time Solved Problem 1

88 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 r0.503.305.708.2010.85 t0.20 r0.703.455.958.5511.10 t r1.454.056.509.2511.75 t r2.755.257.6010.3513.05 t = 0.20 Finding the observed time Solved Problem 1

89 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 r0.503.305.708.2010.85 t0.20 r0.703.455.958.5511.10 t0.75 r1.454.056.509.2511.75 t1.30 r2.755.257.6010.3513.05 Finding the observed time Solved Problem 1

90 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 r0.503.305.708.2010.85 t0.20 r0.703.455.958.5511.10 t0.75 r1.454.056.509.2511.75 t1.30 r2.755.257.6010.3513.05 t = 3.30 – 2.75 Finding the observed time Solved Problem 1

91 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  t0.500.55 r0.503.305.708.2010.85 t0.20 r0.703.455.958.5511.10 t0.75 r1.454.056.509.2511.75 t1.30 r2.755.257.6010.3513.05 t = 0.55 Finding the observed time Solved Problem 1

92 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  t0.500.55 r0.503.305.708.2010.85 t0.20 r0.703.455.958.5511.10 t0.75 r1.454.056.509.2511.75 t1.30 r2.755.257.6010.3513.05 Timing the Elements Solved Problem 1

93 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  t0.500.550.450.600.50 r0.503.305.708.2010.85 t0.200.150.250.350.25 r0.703.455.958.5511.10 t0.750.600.550.700.65 r1.454.056.509.2511.75 t1.301.201.101.101.30 r2.755.257.6010.3513.05 Timing the Elements

94 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  t0.500.550.450.600.500.521.10.0570 r0.503.305.708.2010.85 t0.200.150.250.350.250.241.20.0742 r0.703.455.958.5511.10 t0.750.600.550.700.650.651.20.0791 r1.454.056.509.2511.75 t1.301.201.101.101.301.200.90.1000 r2.755.257.6010.3513.05 Timing the Elements

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