Importance and

Uses of Time
Study
What now?!?
 Time standard is one of the most important pieces of
information produced in the manufacturing department.
 It is used to develop answers for the following problems:
 Determine the number of machine tools to buy
 Determine the number of production people to employ
 Determine the manufacturing cost and selling prices
 Schedule the machines, operations, and people to do the job and
deliver in time with less inventory
 Determine the assembly line balance, determine the conveyor belt
speed, load the work cells with the correct amount of work, and
balance the work cells.
 Determine the individual worker performance and identify
operations that are having problems so the problems can be solved.
Cont.

 Pay incentive wages for outstanding team or individual

performance.
 Evaluate cost reduction ideas and pick the most economical
method based on cost analysis and opinion
 Evaluate new equipment purchases to justify their expense.
 Develop operation personnel budgets to measure the management
performance.
How many machines do we
need?
 The answer depends on two pieces of information:
 How many pieces do we need to manufacture per shift?
 How much time does it take to make one part? (This is the time standard)
Example:
 The manufacturing department wants us to make 2,000 drawer face
per 8-hour shift
 It takes us 0.400 minutes to form the drawer face on a shaper
machine.
 There are 480 minutes per shift (8 hour/shift x 60 minutes/hr)
 -50 minutes downtime per shift (breaks, clean-up,etc.)
 There are 430 minutes (productive time) per shift available @ 100%
performance.
 @ 75% performance (based on history)
(0.75x430 = 322.5 min)
 There are 322.5 effective minutes left to produce 2,000 units.
 322.5/ 2000 units = 0.161 minutes per unit or 6.21 parts per minute.
 The 0.161 minutes per unit is called the Takt time or plant rate.
 Takt time is a German word for plant rate. It is the available effective
minutes divided by the desired output.
 Every operation in the plant must produce a part every 0.161 minutes.
 Therefore, how many machines do we need for this operation?

Time standard = 0.400 minutes per unit

= 2.48 machines
Plant rate = 0.161 minutes per unit
 This operation requires 2.48 machines.
 If other operations are required for this kind of machine , we
would add all the machine requirements together and round
up to the next whole number.
 Thus, we would buy 3 machines
 Tip: Never round down on your own. You will be building a
bottleneck in your plant)
 How many people should we
hire?

A casting operation produces 500 handles per hour.

 Not many people, departments or plants work at 100% performance. How

many hours would be required to produce 2,000 handles if the company
work at the rate of 60%, 85%, or 120%?
 Not many people, departments or plants work at 100% performance. How
many hours would be required if we work at the rate of 60%, 85%, or
120%?

How many hours are needed to produce 2,000 units @ 100%? 4 hours

4 hours = 6.66 hrs 4 hours = 4.7 hrs

60% 85%

4 hours = 3.33 hrs

120%
Data in the Operations Chart
(Water Valve)
 The operations chart which includes every operation
required to fabricate, paint, inspect, assemble, and pack out
a product sum up to a total hours of 138.94 to produce
1,000 units.
 If this is a new product, we could expect 75% performance
during the first year of production.
 Given this scenario:

 Themarketing department has forecasted sales of

2,500 water valves per day. How many people are
needed to make water valves?
 Given this scenario:

 The marketing department has forecasted sales of 2,500 water valves

per day. How many people are needed to make water valves?
(185 hours / 1,000pcs) x 2,500 pcs = 463 hours (manhours)

Divide this by 8 hrs per employee per day, equal to 58 people.

Example: Multi-product plant

 How many direct labor employees do we need for a multi-product plant?

 Per day, 1,132 hours of direct labor are needed. Each employee will work 8
hours , therefore,
Example: Multi-product plant

 How many direct labor employees do we need for a multi-product plant?

 Per day, 1,132 hours of direct labor are needed. Each employee will work 8
hours , therefore,
How much will our product
cost?
 Product cost consist of:
 Direct labor cost is the most difficult component of product cost
to estimate
 Time standards must be set prior to any equipment purchase or
material availability
 Time standards are collected on something like the operations
chart on Water Valve.
 Consider the sample on “water valve production”. What if the
company performs at 85%?