Kathleen McFadden, vice president of operations at Jackson Manufacturing Company, has just received a request for quote (RFQ) from DeKalb Electric Supply for 400 units per week of a motor armature. The components are standard and either easy to work into the existing production schedule or readily available from established suppliers on a JIT basis. But there is some difference in assembly. Ms. McFadden has identified eight tasks that Jackson must perform to assemble the armature. Seven of these tasks are very similar to ones performed by Jackson in the past; therefore, the average time and resulting labor standard of those tasks is known.

The eighth task, an overload test, requires performing a task that is very different from any performed previously, however. Kathleen has asked you to conduct a time study on the task to determine the standard time. Then an estimate can be made of the cost to assemble the armature. This information, combined with other cost data, will allow the firm to put together the information needed for the RFQ. To determine a standard time for the task, an employee from an existing assembly station was trained in the new assembly process. Once proficient, the employee was then asked to perform the task 17 times so a standard could be determined. The actual times observed (in minutes) were as follows:

The worker had a 115% performance rating. The task can be performed in a sitting position at a well-designed ergonomic work-station in an air-conditioned facility. Although the armature itself weighs 10.5 pounds, there is a carrier that holds it so that the operator need only rotate the armature. But the detail work remains high; therefore, the fatigue allowance should be 8%. The company has an established personal allowance of 6%. Delay should be very low. Previous studies of delay in this department average 2%. This standard is to use the same figure. The workday is 7.5 hours, but operators are paid for 8 hours at an average of $12.50 per hour.

Discussion Questions:

In your report to Ms. McFadden, you realize you will want to address several factors:

1. How big should the sample be for a statistically accurate standard (at, say, the 99.73% confidence level and accuracy of {5%)?

2. Is the sample size adequate.

3. How many units should be produced at this workstation per day?

4. What is the cost per unit for this task in direct labor cost?