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How to Estimate Production Quotas for New Jobs

Copyright May 15, 2019 by Robert Wayne Atkins, P.E.
All Rights Reserved.


The following information is Chapter Twenty-Eight in my book: Work Measurement and Ergonomics.


A production quota can be estimated for a new job using any of the following four methods.
  1. Equipment Manufacturer Production Estimates: Use the equipment output estimates provided by the company who designed and built the equipment. However, these estimates usually represent the maximum possible output based on the best possible operating conditions, with no equipment downtime, and with no lost time due to tooling changeovers or recalibration of the equipment for a different product with slightly different parameters. Therefore the estimates provided by an equipment manufacturer almost always need to be reduced. The average (or the lowest) equipment utilization currently being achieved at your facility should be used as a starting point for the utilization of the new equipment. A reasonable learning curve should be selected for the installation of the new equipment and for training an employee to operate the equipment. Additional time needs to be included for your existing maintenance personnel to learn how to troubleshoot and maintain the equipment. The appropriate material handling data should be prorated into the total time to operate the equipment. The material handling time data in chapter 27 could be very useful in this situation. An example of how this type of standard could be created is explained at the end of this chapter.

  2. Company Data on Similar Jobs: If the new job will be very similar to other existing jobs at your company then you can use the engineered standard data for a similar job and change the machine process time to the time required by the new machine. Then verify that the new temporary standard is reasonable and that the amount of manual work that needs to be done while the machine is running can actually be done while the machine is running.

  3. Predetermined Motion Time Systems (PMTS): If the new job will require more manual work than machine work, then the time required for the manual work will need to be estimated. A Predetermined Motion Time System would be a reasonable way to estimate the manual work involved. Any reasonable PMTS could be used. If you use the Holmes' PMTS described in chapter 24 of this book then you will not need to be certified in its use for three reasons: (1) Holmes' PMTS is now in the public domain, (2) Holmes' PMTS is one of the easiest systems to use, and (3) there is enough information in chapter 24 in this book to allow almost anyone to correctly use Holmes' PMTS to create an estimated temporary standard. If you use a PMTS that requires its users to be certified and you are not certified in the use of that PMTS, then the standards you develop may be unexpectedly challenged and this could negatively impact your professional image.

  4. Company Standard Data Developed by Your Company: Once you understand how elements should be constructed for engineered time standards, then you could gradually create "universal" elements based on the jobs that are done at your company. It is my personal belief that "time study" would be the best method for most companies to use to create the time standards for these "universal" elements. The elements should be designed so they could easily be applied to a wide variety of different jobs in your company. These elements should be based on how your company's material handling system works, and how the employees at your company interface with the material handling system. In addition, your elements should be based on: (1) how employees move about in their work areas, and (2) the type of work the employees do when interfacing with the equipment they operate. After you have created a reasonable set of basic elements the only other things you would need for an engineered standard for a new job would be: (1) the machine cycle time of the new equipment, and (2) the type of manual work an employee would need to do to keep the new equipment working properly. This information plus an estimate of the utilization of the machine and the potential scrap loss at the machine will yield the number of machines required to meet your company's total annual production requirements.
Learning Curves

In addition to creating an estimated temporary engineered standard time for a new job, and estimating how many machines and people will be required, it is also useful if an estimate can be provided on how long it will take for a new employee to reach 100% efficiency on the new machine against the engineered standard. The following example illustrates how this can be done using the learning curve information in chapter 10.


Example

Preliminary Information: A new machine is being considered by your company. The official fact sheet that was provided by the machine manufacturer says that the machine can make 120 parts per hour under normal operating conditions and that the scrap rate on the equipment is approximately 0.8%. The equipment requires one full-time operator. The machine cycle time is 0.35 minutes per part and the average time to load and unload the machine is 0.13 minutes per part. The additional time required to process each part by the operator is 0.16 minutes per part but this work can be done during the machine cycle time.

Your company has an average equipment utilization of 87%. The lowest equipment utilization for your company is 63%. On similar types of machines the combined Personal, Fatigue, and Delay allowance is 20%. Similar types of machines have required a 95% learning curve with an efficiency of 60% for the first part. (See Table 10.1 on page 60 in chapter 10.) The parts are purchased from a parts supplier and there are 10 parts per box. The incoming boxes are stacked 50 boxes per incoming pallet and a pallet of parts will be delivered to this operation by a material handling employee. After the parts have been processed at this machine the parts will be consolidated into outgoing containers that will contain 20 neatly stacked parts and those containers will be placed on a conveyor to the next job. The outgoing containers are open and they do not have lids. Empty containers will be delivered to this operation on a pallet by a material handling employee. The material handling employee will remove empty pallets from this operation. Your company works 240 days per year. Your company will need to process 75,000 parts each year for the next two years and then production may increase.

1. What would be a reasonable temporary engineered standard for this new machine?
2. How many parts will one machine be able to process per year?
3. How many machines and how many employees will be required?

Answer:

Total Time per Part (Operator Work Plus Machine Cycle Time):
DescriptionMinutes
Operator load and unload machine = 0.13
Machine cycle time = 0.35
Total Time per Part = 0.48

Operator Free Time During Machine Cycle:
DescriptionMinutes
Machine Cycle Time = 0.35
Operator Processes Part During Machine Cycle Time = - 0.16
Operator Time Available During Machine Cycle Time = 0.19

The following work could be done during the available operator time of 0.19 minutes:

Note: The following times are in minutes and most of the times are from the "Data Table of Universal Standard Times" on page 240 in chapter 27. The following times are prorated based on the number of parts processed during each element.

Work Done by Operator During 0.19 Minutes of Machine Cycle:
DescriptionMinutes
Walk 4 feet to pallet of parts ((0.005 x 4 feet) / 10 parts) = 0.0020
Carry full box of parts to machine (0.060 min. / 10 parts) = 0.0060
Open full box of parts (estimated: 0.150 min. / 10 parts) = 0.0150
Put empty box in trash behind operator (0.039 min. / 10 parts) = 0.0039
Carry full container 3 feet to conveyor (0.051 min. / 20 parts) = 0.0026
Carry empty container 3 feet to machine (0.051 min. / 20 parts) = 0.0026
Total Prorated Time per Part for all Operator Work = 0.0321

The above work could be done during different machine cycles by doing the following work elements together at one time during a single machine cycle. The following times are the actual times and they are not prorated in order to show that the combined work activities below can be done in less than the available operator time of 0.190 minutes.

Description of Work Sequence 1Minutes
Put empty box in trash behind operator = 0.039
Walk 4 feet to pallet of parts (0.005 x 4 feet) = 0.020
Carry full box of parts from pallet to machine = 0.060
Total Time for Work Sequence 1 = 0.119

Description of Work Sequence 2Minutes
Open full box of parts = 0.150
Total Time for Work Sequence 2= 0.150

Description of Work Sequence 3Minutes
Carry full container 3 feet from machine to conveyor = 0.051
Carry empty container 3 feet from pallet to machine = 0.051
Total Time for Work Sequence 3 = 0.102

Based on the above it appears that one employee can successfully keep the machine working smoothly and that the average time for one complete work cycle to process one part will be 0.480 minutes per part.

Utilization:

No data is available on how much time the new machine will be available per day. Therefore to be conservative an average will be determined as follows:
(Average Utilization + Lowest Utilization) / 2
(87% + 63%) / 2 = (150%) / 2 = 75% = 0.75

Available working minutes per day:
(8 hours x 60 minutes/hour x 0.75 utilization) = 360 minutes per day

Scrap Loss:

The estimated scrap loss by the company selling the machine is 0.8%. This figure is probably the lowest scrap loss they experienced during all of their tests. This is not intended to be a critical comment. It is simply an "educated guess" that will be used to justify a reasonable estimate for the average scrap loss for this machine under normal operating conditions. 50% will be added to the 0.8% as follows:

Estimated average scrap loss = 0.8% x 1.50 = 1.2% = 0.012

Engineered Standard Time Per Part:
DescriptionMinutes
Total Cycle Time Per Part = 0.480
20% Personal, Fatigue, and Delay (0.20 x 0.480) = 0.096
Total Standard Time Per Part = 0.576

Number of Good Parts Per Day Per Machine at 75% Utilization:
360 minutes/day / 0.576 minutes/part = 625 total parts per day
625 parts per day x (1 - 0.012 scrap loss) = 617.5 good parts per day

Total Number of Machines Required:
(Annual Output Required) / (Working Days per Year)
(75,000 parts per year) / (240 working days per year) = 312.5 parts/day
(312.5 parts per day needed) / (617.5 good parts per day per machine)
(312.5) / (617.5) = 0.506 machines required

Final Summary:
  1. What would be a reasonable temporary engineered standard for this new machine?
    Answer:
    0.576 minutes per part

  2. How many parts will one machine be able to process per year?
    Answer:
    (240 days/year) x (617.5 good parts per day) = 148,200 parts/year

  3. How many machines and how many employees will be required?
    Answer:
    (75,000 parts/year required) / (148,200 parts/year per machine) =
    0.506 machines required (assuming 75% utilization of machine)
    0.506 employees required (cross-train employee to do other jobs)

Impact of a 95% Learning Curve:

Based on a 95% learning curve with an efficiency of 60% for the first part then Table 10.1 on page 60 shows that approximately 997 parts will be required for a "new" operator to reach an efficiency level of 100%. Since the new machine can make approximately 617.5 parts per day by a trained operator, a "new" operator will probably be able to reach 100% efficiency in 2 or 3 days.

Conclusion:

Based on all of the preceding information, an Engineered Temporary Standard Time can now be prepared for this new job. However, only some of the previous information is relevant to the Engineered Standard Time, such as the actual work done by the employee and the work done by the machine. This is the information that needs to be included in the Engineering Standard Time.

The other information about machine utilization, scrap loss, annual production estimates, and the number of machines and employees required is critical information for decision making purposes but this is not the type of information that becomes part of an Engineered Standard Time. The reason is because engineered standards do not include equipment utilization, or scrap losses, or annual production estimates. These are variables that are controlled by management and they are not fixed, nor are they established by an engineer. In addition, these variables will change based on a variety of factors that are not related to the work done by the machine or by the employee.

Therefore the Engineered Temporary Standard Time only includes the time required by the machine and by the employee. An engineered standard does not include equipment utilization, scrap losses, or annual output estimates.

However, for decision making purposes, all of this information is required and that is why all the information is shown in the previous engineering analysis.

The Engineered Temporary Standard Time for this new job is shown below.

New Job Quota



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