Ch 3 Manufacturing Metrics

and Economics

Sections:
1. Production Performance Metrics
2. Manufacturing Costs

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 Production Performance Metrics

▪ Cycle time Tc
▪ Production rate Rp
▪ Availability A
▪ Production capacity PC
▪ Utilization U
▪ Manufacturing lead time MLT
▪ Work-in-progress WIP

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 Operation Cycle Time

Typical cycle time for a production operation:

Tc = To + Th + Tth
where Tc = cycle time, To = processing time for the
operation, Th = handling time (e.g., loading and
unloading the production machine), and Tth = tool
handling time (e.g., time to change tools)

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Types of Discrete Production

(a) Job shop, Q = 1, (b) batch production, sequential, (c) batch production,
simultaneous, (d) quantity mass production, (e) flow line mass production
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Manufacturing, Fourth Edition, by Mikell P. Groover.
 Production Rate

Batch production: batch time Tb = Tsu + QTc

Average production time per work unit Tp = Tb/Q
Production rate Rp = 1/Tp
Job shop production:
For Q = 1, Tp = Tsu + Tc
For quantity high production:
Rp = Rc = 60/Tp since Tsu/Q → 0
For flow line production
Tc = Tr + Max To and Rc = 60/Tc

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Availability

Availability = proportion uptime of the equipment

MTBF − MTTR
Availability: A=
MTBF
where MTBF = mean time between failures, and MTTR
= mean time to repair

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Availability

Key: MTBF = mean time between failures, MTTR = mean time to repair.

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Production Capacity

Defined as the maximum rate of output that a production

facility (or production line, or group of machines) is able
to produce under a given set of operating conditions
▪ When referring to a plant or factory, the term plant
capacity is used
▪ Assumed operating conditions refer to:
▪ Number of shifts per day
▪ Number of hours per shift
▪ Employment levels

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Plant Capacity

Simplest case is quantity production in which there

are:
▪ n production machines in the plant and they all
produce the same part or product
▪ Each machine produces as the same rate Rp
PC = n Hpc Rp
where PC = plant capacity for a defined period (e.g.
a week), Hpc = number of hours in the period being
used to measure plant capacity, hr/period

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 How to Adjust Plant Capacity

▪ Over the short term:

▪ Increase of decrease number workers w
▪ Increase or decrease shifts per week
▪ Increase or decrease hours per shift (e.g., overtime)
▪ Over the intermediate and long terms:
▪ Increase number of machines n
▪ Increase production rate Rp by methods improvements
and/or processing technology

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Utilization

Defined as the proportion of time that a productive resource

(e.g., a production machine) is used relative to the time
available under the definition of plant capacity

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
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 Manufacturing Lead Time

Defined as the total time required to process a given part

or product through the plant, including any time for
delays, material handling, queues before machines, etc.
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, and Tno = non-operation time

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
Manufacturing, Fourth Edition, by Mikell P. Groover.
 Work-In-Process

Defined as the quantity of parts or products currently

located in the factory that either are being processed
or are between processing operations

WIP = Rpph (MLT)

where WIP = work-in-process, pc; Rpph = hourly plant

production rate, pc/hr; MLT = manufacturing lead
time, hr

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
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 Manufacturing Costs

▪ 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, equipment, taxes), VC = variable costs (e.g.,
labor, materials, utilities), Q = output level.

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
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 Fixed and Variable Costs

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
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 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

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 Typical Manufacturing Costs (J Black)

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 Overhead Rates

Factory overhead rate:

FOHC
FOHR =
DLC
Corporate overhead rate:

COHC
COHR =
DLC

where DLC = direct labor costs

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 Cost of Equipment Usage

Hourly cost of worker-machine system:

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

where Co = hourly rate, $/hr; CL = labor rate, $/hr; FOHRL

= labor factory overhead rate, Cm = machine rate, $/hr;
FOHRm = machine factory overhead rate

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form or by any means, without permission in writing from the publisher. For the exclusive use of adopters of the book Automation, Production Systems, and Computer-Integrated
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 Cost of a Manufactured Part

Defined as the sum of the production cost, material cost, and

tooling cost
Cost for each unit operation = CoiTpi + Cti
where Coi = cost rate to perform unit operation i, Tpi =
production time for operation i, Cti = tooling cost for
operation i
Total unit cost is the sum of the unit costs plus material cost
Cpc = Cm + (CoiTpi + Cti)
where Cpc = cost per piece, Cm = cost of starting material

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