Measures of Production

Sections:
1. Models of Production Performance
2. Manufacturing Costs

A note on modeling:
A model is an approximation of the real world environment. The
question that must be answered is whether or not the model yields
accurate enough results to be used as an analysis tool in support of
design and operational decision making.
Production Concepts and Mathematical Models

Metrics of Interest

• Production rate Rp (sometimes called throughput rate, th)

• Production capacity PC
• Utilization U (Both machine and operator)
• Availability A (Mean time to failure / Mean time to repair)
• Manufacturing lead time MLT
• Work-in-progress WIP

Possibly the two most important performance measures of a factory are

cycletime and work-in-process.
Operation Cycle Time

Typical cycle time for a production operation:

Tc = To + Th + Tth

where Tc = cycle time, (usually measured in minutes)

To = processing time for the operation,
Th = handling time
(e.g., loading and unloading the production machine, may also include the time
spent waiting for the machine in a queue)
Tth = tool handling time
(e.g., time to change tools)

Cycle times are random variables although generally in analysis they are treated
as deterministic variables. Really only interested in long run averages in steady
state.
Production Rate (or Throughput Rate)

Batch production:
batch time Tb = Tsu + QTc Tsu = Setup Time
Average production time per work unit Tp = Tb/Q
Production rate Rp = 1/Tp

Job shop production:

For Q = 1, Tp = Tsu + Tc

For high quantity production:

Rp = Rc = 60/Tc since Tsu/Q  0 (Economy of scale) Rp = Production Rate

For flow line production

Tc = Tr + Max To and Rc = 60/Tc

Production rate usually measured in (pc/min; parts/min; products/min)

Production Capacity
How many products can be manufactured/(output to customer or warehouse) in
a specified time period?

The plant capacity for facility in which parts are made in one
operation (no = 1):

PCw = n Sw Hs Rp (Sw Hs collectively just the time engaged in active

production measured in (hours/week) in this case)

where PCw = weekly plant capacity, units/wk, n = the number of machines in

service.

Plant capacity for facility in which parts require multiple

operations (no > 1):

nS w H s R p
PCw 
no
where no = number of operations in the routing,
n = number of machines operating in parallel
Utilization and Availability

Q
Utilization: U 
PC

where Q = quantity actually produced, and PC = theoretical plant capacity

Availability:

MTBF  MTTR
A
MTBF

where MTBF = mean time between failures, MTTR = mean time to repair
Manufacturing Lead Time

MLT = no (Tsu + QTc + Tno)

where MLT = manufacturing lead time,

no = number of operations,
Tsu = setup time,
Q = batch quantity,
Tc cycle time per part,
Tno = non-operation time

For flow lines:

𝑀𝐿𝑇 = 𝑛𝑜 𝑇𝑟 + 𝑀𝑎𝑥 𝑇𝑜 = 𝑛𝑜 𝑇𝑐
Work-In-Process

This relationship is commonly

AU  PC  MLT  known as Little’s Law
WIP = 𝑊𝐼𝑃 = 𝑅𝑝 𝑀𝐿𝑇
S w H sh

where WIP = work-in-process, pc; Equally represented as

A = availability, 𝑊𝐼𝑃 = 𝜆 𝑀𝐿𝑇
U = utilization, Where 𝜆 is the arrival rate
of parts into the system
PC = plant capacity, pc/wk;
MLT = manufacturing lead time, hr;
Sw = shifts per week,
Hsh = hours per shift, hr/shift
Costs of Manufacturing Operations

• Two major categories of manufacturing costs:

1. Fixed costs - remain constant for any output level
2. Variable costs - vary in proportion to production output level

• Adding fixed and variable costs

TC = FC + VC(Q)
where TC = total costs,
FC = fixed costs (e.g., building, rates and taxes),
VC = variable costs (e.g., labor, materials, utilities),
Q = output level.

(This type of cost analysis involves more detailed accounting and measurement
and is usually done upon project entry)
Fixed and Variable Costs
*In the real world,
this is a curve,
Because VC is
also a function of Q

*Time Variant, because

FC can be a function
of Q and t
 Manufacturing Costs

• Alternative classification of manufacturing costs:

1. Direct labor - wages and benefits paid to workers
2. Materials - costs of raw materials
3. Overhead - all of the other expenses associated with running the manufacturing
firm
• Factory overhead
• Corporate overhead

(This type of cost analysis is used in the development of budgets on a year

to year basis. Financial forecasting etc.)
Overhead Rates

Factory overhead rate:

FOHR =
FOHC
DLC
Corporate overhead rate:
COHC
COHR = DLC

where DLC = direct labor costs

Cost of Equipment Usage

Hourly cost of worker-machine system:

Co = CL(1 + FOHRL) + Cm(1 + FOHRm)

where Co = hourly rate, R/hr;

CL = labor rate, R/hr;
FOHRL = labor factory overhead rate,
Cm = machine rate, R/hr;
FOHRm = machine factory overhead rate
In the following weeks

• Going to cover automation and control technologies as they apply to

generalized systems
• Will analyze materials handling systems, both for material transport as
well as storage.
• We will then start covering specific forms of manufacturing systems
including their physical architecture as well as their modeling
requirements.
• Single station workstations
• Multiple workstation single product systems
• Flow lines
• Flexible Manufacturing Systems (FMS)
• Automated assembly systems.
• Finally, we will look at a few of the manufacturing support systems.