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Chapter 18

Chapter 18. Productivity and Learning Curves. What is Productivity?. Different types of productivity : Capital: # products produced ÷ asset value Materials: # prods. produced ÷ $ spent on mat’ls Direct labor: # prods. produced ÷ direct labor-hrs

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Chapter 18

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  1. Chapter 18 Productivity and Learning Curves

  2. What is Productivity? Different types of productivity: Capital: # products produced ÷ asset value Materials: # prods. produced ÷ $ spent on mat’ls Direct labor: # prods. produced ÷ direct labor-hrs Overhead: # prods. produced ÷ $ spent on overhd It’s usually possible to increase one type by decreasing another type.

  3. Labor Productivity Labor productivity has traditionally be the type of productivity measure most focused on. However, with improvements in technology and automation, it is less important for many companies today. Some state-of-the-art factories using CIM have no direct labor employees (a lights-out factory), so direct labor productivity is completely irrelevant at those factories. Management should track all types of productivity.

  4. Labor Productivity

  5. Designing Workers’ Jobs What are the criticisms of assembly line work? Job design approaches: • Cross-training—train for multiple positions • Job enlargement—add additional similar tasks • Job enrichment—add different types of tasks, such as inspection, testing, planning, etc. • Team production—team is responsible for work; some self-management What is the perspective of labor unions about this? What is worker empowerment?

  6. Learning Curves Principle: The more times a person performs a task, the quicker they get at it. Studies have shown that this learning generally takes place at a predictable rate  the learning rate (LR) For example, in the aircraft industry it has been shown that the typical learning rate for aircraft manufacturing tasks is around 80%.

  7. Learning Curves Every time you double the number of units produced, the time required per unit decreases by a fixed percentage. A 70% learning rate means that if the 8th unit took 100 hours to produce, then the 16th unit would take 70 hours to produce. 3 ways to use learning curves: • double the number of units • learning curve formula • learning curve table

  8. Double the Number of Units nth unitlabor hrs. 80% learning rate 1 100 2 4 8 16 32

  9. Learning Curve Formula Tn = T1(nb) where b = (log LR) / (log 2) or b = (ln LR) / (ln 2) For example, If T1=65 with LR=75%, LRb 70% = .70 -0.515 75% = .75 -0.415 80% = .80 -0.322 85% = .85 -0.234 90% = .90 -0.152

  10. Learning Curve Table Table 18.12, page 724 Suppose it takes 43 hours to produce 1st unit. How long should it take to produce 12th unit using a 75% learning rate? How long should it take to produce units 1-10?

  11. Learning Curve Example It takes 120 labor hours to produce the 1st unit of a new product (the prototype). The company expects an 85% learning rate. How long should it take to produce the 8th unit using: a.) double the number of units b.) learning curve formula c.) learning curve table LR = 0.85 T1 = 120 n = 8

  12. Learning Curve Example a.) nth unitlabor hrs. 85% learning rate 1 120 2 4 8 16

  13. Learning Curve Example b.) Tn = T1(nb) b = (ln LR) / (ln 2)

  14. Learning Curve Example c.) T8 = T1(factor) = T9 = T1(factor) = T1-8 = T1(factor) =

  15. Learning Curve Example Suppose the labor cost rate is $17.00 per hour and company policy is to charge a customer 3 times the labor cost for a job. What should the price be for the first 8 units? from table: T1-8 = 120(5.936) = 712.32 hours so Price =

  16. Learning Curve Example Suppose the company just finished the 1st 8 units and the customer wants to know how much they would be charged per unit for an additional 5 units? T1-8 = 712.32 T1-13 =

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