Widget Production Executive Summary
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Widget Production Executive Summary
The operations management process of Taylor Inc. needs evaluation in order to assist in maximizing labor productivity. In order to recommend an alternative management technique a cost-benefit matrix, listed below, evaluates the current Widget assembly line along with two alternatives.
Cost-Benefit Matrix
Current
Alternative 1
Alternative 2
Wasted Motion
Physical Lifting
People Required
Productivity
Workers Comp Claims
Capital Investment
$ –
$ 1,300,000
$ 967,000
Life of Equipment
Wages Per Shift
$ 5,848
$ 2,064
$ 3,096
Wage Per Year (260 working days)
$ 1,520,480
$ 536,640
$ 804,960
Cost of Workers Comp Claims
$ 436,000
$ 32,700
$ 207,100
Total Wages and Claims
$ 1,956,480
$ 571,404
$ 1,015,156
Savings from Wages and Claims
$ 1,385,076
$ 941,324
The recommended management technique as indicated in the above cost-benefit matrix is Alternative 1. Alternative 1 provides the best option, in that the savings in Workers Comp Claims exceeds Alternative 2 and the current; resulting in a higher cash flow even after deducting capital investment. Alternative 1 not only has immediate cash flow impact, it is superior in many other aspects as well. Productivity drastically increases from 208 to 392 with less than half of the current workforce. Finally, wasted motion is reduce to a mere 1%, Alternative 1 reduces the physical lifting from 42 pounds to just 12 pounds; this will drastically reduce employee down time due to Workers Comp Claims.
Effects on Productivity
Alternative 1 will have a positive effect on productivity. Productivity will almost double from 208 to 392; an increase of 184 widgets per shift with less than half of the current workforce. Wasted motion is reduced from 27% to an astonishing 1%. Physical lifting is reduced from 42 pounds to only 12 pounds; the reduction in lifting will also reduce Workers Comp Claims and employee absences. Since wasted motion and lifting is reduced, it is believed that employee moral will increase and in return increase overall