Chapter 9: Proposed Method Chapter 9: Proposed Method ImplementationImplementation

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AndiraAndira

Cost Benefit AnalysisCost Benefit Analysis

Chapters 7 - 9, in “The Complete Problem Chapters 7 - 9, in “The Complete Problem Solver”Solver”

Chapter 9, in our text, “Niebel’s Methods”Chapter 9, in our text, “Niebel’s Methods”

Uses and Importance Uses and Importance of Cost Benefit Analysis of Cost Benefit Analysis

Choose the most appropriate alternativeChoose the most appropriate alternative to to present to your managementpresent to your management

Sell the idea to your management!! Sell the idea to your management!! – If you can’t sell the idea – no change will If you can’t sell the idea – no change will

happen.happen.– Many people new to the job market view Many people new to the job market view

“selling” ideas as outside their scope of “selling” ideas as outside their scope of responsibility and expertise, but it is an responsibility and expertise, but it is an essential part of most jobs!essential part of most jobs!

Selling an ideaSelling an ideaDescribe situation:Describe situation:– What change do you propose?What change do you propose?– What alternatives were considered?What alternatives were considered?– What was the rationale behind the choice? (e.g. why What was the rationale behind the choice? (e.g. why

is A better than B or C?)is A better than B or C?)

What are the predicted improvements? What are the predicted improvements? (Quality? Reliability? Performance? Cost?)(Quality? Reliability? Performance? Cost?)How much capital will be required? (e.g. Start-up How much capital will be required? (e.g. Start-up and maintenance costs).and maintenance costs).How long till capital is recovered? (Cross-over How long till capital is recovered? (Cross-over table),table),What is the expected lifetime of the change and What is the expected lifetime of the change and what is the expected Return On Investment what is the expected Return On Investment (ROI) over that lifetime?(ROI) over that lifetime?

Implementing a changeImplementing a change

Choose the most appropriate alternative.Choose the most appropriate alternative. Methods for to deciding between alternative solutionsMethods for to deciding between alternative solutions

– Value EngineeringValue Engineering– Cost-benefit AnalysisCost-benefit Analysis– Economic AnalysisEconomic Analysis

Sell methodSell methodIdentify a process for change. Where and when will the Identify a process for change. Where and when will the method be piloted? Who will use it? How will they be method be piloted? Who will use it? How will they be trained? When will everyone use it?trained? When will everyone use it?Establish base rates using reliable job evaluationsEstablish base rates using reliable job evaluationsAccommodate workers of all abilitiesAccommodate workers of all abilities

Choosing the most appropriate Choosing the most appropriate AlternativeAlternative

Can use all of the methods from Can use all of the methods from J. R. Hayes, Chapter 7, 8 and 9:J. R. Hayes, Chapter 7, 8 and 9:

– Dominance, Lexicographic, Additive Weighting, Dominance, Lexicographic, Additive Weighting, Satisficing,Satisficing,

- Optimistic, pessimistic and Hurwitz,Optimistic, pessimistic and Hurwitz,- Expected ValueExpected Value

And from Neibel and Freivalds, Ch. 9:And from Neibel and Freivalds, Ch. 9:– Decision and Hazard Action tables,Decision and Hazard Action tables,– Value Engineering (same as Additive Weighting)Value Engineering (same as Additive Weighting)– Cost Benefit Analyses under uncertainty (CPS Cost Benefit Analyses under uncertainty (CPS

Chapter 9, and Multi-criteria decision making in Chapter 9, and Multi-criteria decision making in “Neibel’s Methods Chapter 9)“Neibel’s Methods Chapter 9)

– Cross-over chartsCross-over charts

Examples of Methods for Examples of Methods for comparing several alternativescomparing several alternatives

Value engineeringValue engineering: computes a “value score” for : computes a “value score” for each alternative, thus facilitating their each alternative, thus facilitating their comparison. comparison. Cost-benefit analysisCost-benefit analysis: allows comparison of : allows comparison of alternatives based on a cost/benefit ration. alternatives based on a cost/benefit ration. (Small cost/benefit is desirable).(Small cost/benefit is desirable).Cross-over chartsCross-over charts: allows visualization of the : allows visualization of the total cost of several alternatives under multiple total cost of several alternatives under multiple conditions.conditions.Expected return (value):Expected return (value): allows comparison of allows comparison of alternatives based on a weighted average of the alternatives based on a weighted average of the likely returns under various conditions.likely returns under various conditions.

Decision Tables & Hazard Action TablesDecision Tables & Hazard Action Tables

Hazard action tablesHazard action tables used in used in safety programs,safety programs,Can be used to recommend actions in Can be used to recommend actions in emergency and disaster situations, (fire, Katrina, emergency and disaster situations, (fire, Katrina, hospital emergency procedures)hospital emergency procedures)Have form:Have form:– “ “If If conditioncondition x, y, z, etc, x, y, z, etc, – Then do Then do actionaction A A

Can unambiguously recommend what to do in Can unambiguously recommend what to do in complex situations,complex situations,Help by encouraging people to think of Help by encouraging people to think of appropriate actions before an emergency arises.appropriate actions before an emergency arises.

Decision tables can be used to Decision tables can be used to choose between alternatives:choose between alternatives:

Assembly task example:Assembly task example:If the assembly is perfect, then put in “completed If the assembly is perfect, then put in “completed bin,”bin,”If two or fewer parts are defective, then put in If two or fewer parts are defective, then put in “rework” bin,“rework” bin,If three or more parts are defective, then put in If three or more parts are defective, then put in “scrap” bin.“scrap” bin.

Can apply to many areas: Can apply to many areas: Medical room emergency procedures, Medical room emergency procedures, sorting job applicants, etc.sorting job applicants, etc.

Decision Table vs Decision MatrixDecision Table vs Decision Matrix

A decision tableA decision table

Just includes simple “yes” Just includes simple “yes” “no” answers. Binary.“no” answers. Binary.Other names: “gates.” Other names: “gates.” Each condition is a “gate” Each condition is a “gate” like that a horse would like that a horse would leap over. leap over. Making it through the gate Making it through the gate is a “go/no go” decision.is a “go/no go” decision.Good for rapidly Good for rapidly winnowing acceptable winnowing acceptable and unacceptable and unacceptable solutions.solutions.

A decision matrixA decision matrix

has multi-valued results has multi-valued results Example: a table created Example: a table created using the weighted sums using the weighted sums method in method in “The Complete Problem “The Complete Problem Solver.”Solver.”Also known as “value Also known as “value engineering.”engineering.”

Good for comparing a few Good for comparing a few “good” options to find the “good” options to find the “best.”“best.”

Decision Table ExampleDecision Table Example

Foot operated press for making blades (for a Foot operated press for making blades (for a hand-held knife with plastic handle):hand-held knife with plastic handle):– Cut blade with press using foot operated Cut blade with press using foot operated

pedal, pedal, – Pick up rubber nib with tweezers,Pick up rubber nib with tweezers,– Place nib on blade,Place nib on blade,– Position blade on plate using stereoscopePosition blade on plate using stereoscope

ProblemsProblems

Operators complain of pain in:Operators complain of pain in:– Wrist Wrist – Neck Neck – BackBack– AnkleAnkle

Come up with alternative process changesCome up with alternative process changes– Use CTD Risk index (Fig 5-25) to calculate risk of Use CTD Risk index (Fig 5-25) to calculate risk of

injury from new alternatives.injury from new alternatives.– Calculate increases in productivityCalculate increases in productivity

Costs and Benefits of each optionCosts and Benefits of each option

Work design and methods changes

∆ Productivity

(%)

∆ CTD Risk (%)

Cost ($)

1.Foot operated electric switch

0 -1 175

2. Adjust stereoscope 0 -2 10

3. Video projection system +1 -2 2,000

4. Gravity feed bin +7 -10 40

5. Vacuum stylus +1 -40 200

A Decision TableA Decision TableCompany Policy says “Proceed if condition 1, and either 2 OR 3 are met:

Condition 1: implementation cost is $200 or less, Condition 2: productivity increase greater than 5%Condition 3: injury risks reduced by more than 33%

Conditions Action

Method Changes #1 #2 #3 Policy

1. Electric switch ---

2. Adjust stereoscope ---

3. Video projection system

---

4. Gravity feed bin Proceed

5. Vacuum stylus Proceed

OR

Value EngineeringValue Engineering

Value EngineeringValue Engineering is any technique in is any technique in which you use numbers and weights to which you use numbers and weights to create a “create a “value scorevalue score” for each alternative ” for each alternative (same as Additive Weighting from J. R. (same as Additive Weighting from J. R. Hayes chapter 7).Hayes chapter 7).

Each alternative is given a “value score” Each alternative is given a “value score” so that all alternatives can be so that all alternatives can be comparedcompared..

Both Both costscosts and and benefitsbenefits are considered. are considered.

Cost-Benefit AnalysisCost-Benefit Analysis

Each 1% increase in productivity = $645 per year, For each 1% decrease in Cumulative Trauma Disorder (CTD) risk, benefit = $60/year

Small cost/benefit is good! For any C/B less than 1, benefits exceed costs – its worth doing.

Method ChangesProductivity

Injury rates Total Cost ($)

Cost benefit

1. Electric switch 0 60 60 175 3 2. Adjust stereoscope 0 120 120 10 0 3. Video projection system 645 120 765 2,000 3 4. Gravity feed bin 4,515 600 5,115 40 0 5. Vacuum stylus 645 2,400 3,045 100 0 6. Methods changes 2, 4, 5 5,160 3,120 8,280 150 0

Table 9.5 Cost Benefit Analysis for Cutoff OperationBenefit ($)

Cross-over ChartsCross-over Charts

The value of an alternative may also depend on:The value of an alternative may also depend on:– How long is it used?How long is it used?– How long is it in production?How long is it in production?– How many are you going to sell or purchase?How many are you going to sell or purchase?

Cross-over charts are good for graphically Cross-over charts are good for graphically showing after how much time/production/etc. showing after how much time/production/etc. one alternative becomes better than others.one alternative becomes better than others.Very useful tool for quickly showing your team, Very useful tool for quickly showing your team, or your management the economic pros and or your management the economic pros and cons of several options.cons of several options.

Many factors must be considered Many factors must be considered when implementing changeswhen implementing changes

Hawthorne EffectHawthorne Effect: the positive impact of : the positive impact of involvement of workers in change (to get involvement of workers in change (to get “buy-in,” similar to ““buy-in,” similar to “participatory designparticipatory design.”).”)Resistance to changeResistance to change,,Job evaluation: Job evaluation: who will perform new or who will perform new or changed operations: A changed operations: A job evaluationjob evaluation allows company to identify importance of allows company to identify importance of job to the company, and the qualifications job to the company, and the qualifications required to perform it.required to perform it.

Hawthorne EffectHawthorne Effect

Worker involvement in change, and Worker involvement in change, and motivation can have a large impact on motivation can have a large impact on productivity.productivity.

Initial study done at Western Electric, Initial study done at Western Electric, Co.’s Hawthorne plant near Chicago (1924 Co.’s Hawthorne plant near Chicago (1924 – 1927).– 1927).

Hawthorn Effect (cont.) Hawthorn Effect (cont.)

Workers responded to change as they felt Workers responded to change as they felt they were they were expectedexpected to act. to act.

Three experiments at Hawthorne plant:Three experiments at Hawthorne plant:– Illumination Illumination increasedincreased; productivity ; productivity increasedincreased..– Illumination Illumination decreaseddecreased; productivity ; productivity decreaseddecreased..– Illumination Illumination samesame, but light bulbs changed and , but light bulbs changed and

workers allowed to workers allowed to believebelieve it illumination was it illumination was increacedincreaced; productivity ; productivity increased.increased.

Hawthorne Effect (cont.)Hawthorne Effect (cont.)

Another set of experiments (1927 – 1932), explored Another set of experiments (1927 – 1932), explored impact of impact of mental attitudesmental attitudes on effectiveness on effectiveness

6 operators were studied under various conditions:6 operators were studied under various conditions:– Group incentives,Group incentives,– More rest breaks,More rest breaks,– Shorter work days,Shorter work days,– Shorter work weeks,Shorter work weeks,– Lunches or beverages at company expense,Lunches or beverages at company expense,

All changes discussed in advance with 6 workers, effects All changes discussed in advance with 6 workers, effects of changes discussed.of changes discussed.

Regardless of the condition, workers:Regardless of the condition, workers:– Took fewer sick days than co-workersTook fewer sick days than co-workers– Increase in social satisfaction.Increase in social satisfaction.

Job EvaluationJob Evaluation

First need a First need a job descriptionjob description detailing: detailing:– Job Title,Job Title,– Job responsibilities (unambiguous as possible),Job responsibilities (unambiguous as possible),– List of machines and tools used in the job, (e.g. List of machines and tools used in the job, (e.g.

forklift, microscope)forklift, microscope)– Mental and physical requirements, (e.g. must Mental and physical requirements, (e.g. must

have valid drivers license, certified fork-lift have valid drivers license, certified fork-lift operator, 20/40 vision, etc.)operator, 20/40 vision, etc.)

Why are Job Evaluation Systems Why are Job Evaluation Systems Important?Important?

Explains why one job is “worth” more than Explains why one job is “worth” more than another (i.e. more pay).another (i.e. more pay).Provides explanation of why a change to a Provides explanation of why a change to a method results in a change in pay,method results in a change in pay,Basis for matching personnel with specific Basis for matching personnel with specific qualifications to specific jobs,qualifications to specific jobs,Determines criteria for hiring and Determines criteria for hiring and promotion,promotion,Identify opportunities for methods Identify opportunities for methods improvements.improvements.

Job Evaluation SystemsJob Evaluation Systems

Classification methodClassification methodPoint systemPoint system: each job is given a value : each job is given a value “score” based on a weighted average.“score” based on a weighted average.Factor comparison methodFactor comparison methodRanking methodRanking method

For this exam only need to go up to pg 355 For this exam only need to go up to pg 355 in Ch. 8 – but you will need to know the in Ch. 8 – but you will need to know the whole chapter for the final exam.whole chapter for the final exam.