Direct Labor Hours Research Articles

Applied Research on Electronic Documentation and 3D Product Model Deployment in Production and Assembly Processes

The three-dimensional (3D) product model has become a tool that has transitioned from a legacy instrument, used in design, to an emerging technology applied to production and assembly processes. As this evolution has occurred, the need has developed to understand the value of deploying the 3D product model beyond the design phase. This research answers the question and solves the problem, does electronic documentation inclusive of the 3D product model add to the production workers’ ability to complete the production task? To answer this question, the methods used were that the research team tested how accurately and quickly a production and assembly team could build the product using interactive, electronic documentation, including the 3D product model, as a means to understand the design intent as opposed to printed bills of materials (BOMs) and two-dimensional (2D) paper drawings. The conclusions that can be drawn from this research are that the research found statistically significant improvements in the production throughput time (~10%), reductions in the direct labor hours per unit (~14%), and retained quality levels, when deploying electronic documentation, including the 3D product model, into the production and assembly processes. Through the deployment of the interactive 3D product model electronic documentation to the production floor, the organization also took a step towards creating a digital twin of the produced product and laid a foundation for the further adoption of Industry 4.0 practices. The novelty of the work and the areas where it goes beyond previous efforts in the literature concerns the current body of knowledge that does not demonstrate a repeatable methodology through which industry and other researchers can replicate the experiment on demonstrating economic value when deploying the 3D product model to production and assembly processes. In this paper, the authors aim to build on prior work to demonstrate a repeatable methodology for determining the economic value of 3D product model deployment in production and assembly processes through applied research.

İmalat İşletmelerinde Maliyet ve Performans Planlamasına İlişkin Bir Uygulama (An Application on Cost and PerformancePlanning in Manufacturing Companies)

Purpose – The aim of this study is to provide an optimal solution model for production with performance, minimum cost, and maintaining work in industrial production enterprises. With this optimal solution model proposal, the most important part of the preconditions of maximizing the company value or maximizing the interests of the partners, which is the main financial goal of the enterprises, will be provided. Design/methodology/approach – This study is an applied research whose study universe is “manufacturing companies”. Moreover, multi-departmental manufacturing companies are taken as a sample. The model described in the study is especially suitable for industrial enterprises which have spare part manufacturing, installation, and engineering departments. In this study, first part of the method is discussed. The methodological approach of determining the workforce capacity of the production department is explained. The correlation between the variables and their reflection on labor costs will be the parts of other studies to be carried out in this context. Findings – The first findings of the model are the monthly and annual gross and net working hours determined by the working schedule for the employees of the production unit. The standard performance of the workers who work in the production unit is determined as the second finding. As a result of associating these two kinds of findings with the production budget targets, the calculations regarding the determination of the direct and indirect labor hours of the production unit, the total number of workers in the production unit, and their optimization are the other findings. Overtime is the solution to the monthly labor capacity gap between the total labor capacity and the total labor hours for the production unit. This is another main finding as well. Discussion – The model prevents the problems which are inhumane and threaten labor peace and their high costs caused by the cycle of dismissal and recruitment that will be created by the production budget monthly target differences in large manufacturing enterprises. This model reveals the methodology of how production activities can be achieved with minimum cost and high performance while preserving legal and ethical values. The model is also analytical as a cost accounting application and budgeting technique.

Model Pemrograman Linier untuk Memaksimalkan Laba Disertai Analisis Dual: Sebuah Kasus pada Agroindustri Kreatif Roti di Desa Keduanan Kecamatan Depok Kabupaten Cirebon

In an effort to maximize production profits, companies often face constraints that come from the resources used in the production process. Moreover, companies that produce more than one type of product are required to be able to make optimization efforts in determining the level of production that can achieve maximum profit with limited available resources. This study aims to analyze the most optimal combination of production levels to maximize profits from four types of sweet breads produced based on 3 resource constraints, namely the availability of raw materials, direct labor hours and machine working hours; and perform a dual analysis on each resource. This research was conducted in Keduanan Village, Depok District, Cirebon Regency in a creative agro-industry company called Roti Wakwaw. The design of this study is a quantitative design with the interview method using a questionnaire to 7 people consisting of one company owner and six employees. Data analysis tools using linear programming and dual analysis. The results of the research include an optimum model that increases profits with an additional profit of Rp. 129,700 per one day of production from the actual profit. The results of the dual analysis show that all resources are in excess and inactive, except for sugar as raw materials which are rare and positive.

A Guide to Implementation of Time- Driven Activity -Based Costing in Saudi Electronic University

This research proposes a guide to implementation of time- driven activity -based costing (TDABC) in Saudi Electronic University (SEU) as an alternative to the traditional costing systems. It is worth mentioning that the cost accounting system should support mission and vision of the university by detecting any idle capacity and providing relevant information for rational decision-making as well as improving the quality of services provided to students and finally managing SEU’s resources efficiently and effectively. According to Saudi’s vision 2030, public universities in Saudi Arabia should act on both of revenue side and cost side.
 
 In the current costing system of SEU, there are no cost pools at colleges’ level, at academic departments’ level, at courses’ level, as well as at students’ level. Rather cost pools found at university’ level only. Therefore, the current costing system provides neither information on unit cost per student at any academic program nor information on the unused capacity at any resource centers.
 
 Despite the fact that TDABC theoretically overcomes the criticism to both traditional costing system that uses direct labor or machine hours as a cost driver and the traditional activity- based costing (ABC that uses many transactions cost drivers to allocate overhead costs to cost objects. The implementation of TDABC is still challenging particularly in universities by using the time as the primary cost driver for allocating resource costs to final cost objects in academic programs especially the human labor is considered the main resource in universities.
 
 The proposed guide to implementation TDABC provided SEU’s management information, including but not limited to, the average actual unit cost per student in each academic program either per semester, or per year, comparing actual fees students paid in each academic program to the actual average unit cost in each academic program to determine whether SEU covers all costs. In addition, comparing the average unit cost per student among all academic programs and investigating reasons of variations. The guide helps management determine the unused capacity in each resource center as well as preparing budgets of all resource centers accurately based on the actual used capacity.

Today’s World: Lean Manufacturing Environments and Cost Management

This paper will help to identify the interrelationship factor of cost management in lean production system. Standard overhead costs are sum up of expected direct labor & machine hours. In-fact major problem of cost is not direct labor or material, but the cost allocation. Before direct labor was a huge expense for the organizations, but now usually all works is done by robots and electronics instruments, so direct labor cost is almost less than 8% of the total costs. But in opposite side overhead cost is higher than before because extensive usage of machineries. As shown in Table 1 and 2, any changes in a product mix can mislead and extra addition any other product costs, if direct labor saving took for product B, so product A will bear extra cost of overhead because of changes in product B, in-fact no changes in product A process. The most advanced level in the lean production is “Four Wall” Transfer to finished products and vendor receipts. The control requirements of four walls are: Continuous product flow, short lead time and few scrap.

ANALISA BIAYA STANDAR DAN PENGENDALIAN BIAYA TENAGA KERJA LANGSUNG PADA PT. DRYDOCKS WORLD PAXOCEAN DI KOTA BATAM

T he research was conducted in PAXOCEAN DRYDOCKS WORLD to know whether the establishment of a standard direct labor costs as a means of cost control being effectively and efficiently on behalf of the company. The results of this research show the calculation method analysis of direct wage rates and variansi methods of analysis variansi the number of direct labor hours in the period June suffered losses amounting to Rp1.317.365 or 2,51% of standard fee with total actual hours of work amounted to 3.915. Whereas with the same calculation method analysis on period of July had profit of Rp 2.104.517,52 or 4.88 out of standard costs with actual working hours amounting to 4.686 .5 hours. T he conclusion is based on calculation and analysis that has been done the writer can say in standard costing PT Drydocks World Paxocean has been set up properly and in accordance with what is happening and with standard costing is good then the use of the standard fee as a means of controlling the cost of direct labor can be said to be effective and efficient. Keywords: Standard Costs, Direct Labor Cost Control

Effect of Calculation of Cost of Production on Selling Price of Products Manufacturing Companies in Papua (Case Study CV. Sagita Grafika)

This study aims to determine how the effect of calculating the cost of an order made by the company and the method of calculation of full costing of the product selling price fixing mold. The data used is primary data, order data produced in the period from January 2013 to December 2013, the secondary data obtained from interviews and literature. From these results it can be seen that CV. Sagita Grafika calculate the cost of the product by using the order cost method that produces cost price and the selling price that is incompatible with existing theory, in which the charging of indirect labor and overhead costs shared equally on all types of orders in the amount of Rp. 11.78825 million for indirect labor costs and Rp. 3.1243 million for overhead costs so that volume orders will bear fewer overhead costs equal to the volume of orders more. By using a full costing analysis generated calculation method that the volume of orders that more will earn imposition overhead costs more, because in this calculation loading overhead costs charged by direct labor hours incurred for each order. So that orders with a total volume that many will use a lot of labor hours and vice versa. So in this study that most large orders received charging overhead is the order BS-02 Rp. 31,115,590.92 and most orders received little overhead loading is KK-01 orders in the amount of Rp. 2,208,622.32. Results of a comparison between the cost of the company with the full costing is the total cost of less Rp. 27,499,540.57, the selling price of Rp. 5,866,543.90, while the larger profit generated by using the full costing method that is Rp. 21,632,996.67

Jumping to Hasty Experience Curves

Abstract: The used to be treated as a rule of thumb in strategic management theory. However, it would be hasty to conclude that an approximately 80% log-linear experience curve is a rule of thumb regardless of the industry, company, or product. According to the fundamental research on curves, generally, the new model of a product is partly composed of old model parts and we cannot observe the of these parts from the beginning of the processes. Therefore, in the first product of the new model, the rates of old model parts cannot be identical logically, even if the parts' rates are identical at the beginning. In fact, empirical data repeatedly deny identical rates for all products. Applying search theory, we obtain an approximate log-linear curve and show the curve's initial concavity, that is, if we started observing the midstream, and not from the beginning of the process. Thus, both varied rate proper to each product and initial concavity of the curve are phenomena induced by observing the midstream.Keywords: curve, experience curve, search theory, initial concavity, function(ProQuest: ... denotes formulae omitted.)IntroductionThe continuing production of multiple units of the same product often shows the phenomenon of decreasing production cost per unit. The pattern in which the production cost per unit (or the direct labor hours per unit) decreases at a given reduction rate is known and researched as the progress or learning curved An early observation of this pattern emerged in aircraft manufacturing (Dutton & Thomas, 1984; Dutton, Thomas, & Butler, 1984). In 1936, T. P. Wright, aeronautical engineer for Curtiss-Wright Corporation, published a widely referenced paper (Wright, 1936) on the curve.The curve is generally expressed by the function f: the production cost2 of the nth unit of the product is formulated as...where the n of the nth unit of the product is the cumulative number of units produced, and a and b are constants (a > 0, -1With respect to the function for the log-linear model, when the cumulative unit number doubles, the production cost per unit declines 2b times:...where p = 2b is the rate, and 1 - p = 1 - 2b is the ratio.3 For example, when b = -0.322, the ratio (1 - p) is 20% and the rate (p) is 80%, which means an 80% curve. Following the function, the production cost per unit declines to 100 p % with each doubling of cumulative volume. During World War II, functions were applied not only to the aircraft industry but also to the shipbuilding industry in an attempt to use the data created by government shipbuilding contractors (Searle, 1945; Yelle, 1979).From Learning Curve to Experience CurveAfter World War II, Andress (1954) advocated that the application of curves developed in the aircraft industry during World War II would result in more accurate and easier forecasting of production costs. Thus, he insisted that their application is valid in industries other than aircraft, namely, electronics, home appliances, residential home construction, shipbuilding, and machine shops. Further, Hirschmann (1964), whose basic argument relies on Andress (1954), advocates that the curve is applicable in petroleum refining, to which Andress disagreed. He insisted on the application of the curve at the industry level in the petroleum, electric power, and steel industries.The of assembly work is much faster than that of machine work, and approximately 75% of the total direct labor input in the aircraft industry is assembly work. …

Improving Manufacturing Management with Activity Based Costing

The calculation of product cost in modern manufacturing enterprises includes assigning direct costs and indirect costs (overhead) to products. Direct material and direct labor costs can be traced to individual products or batches of products. However, because overhead is an indirect cost and benefits more than one product, it is difficult if not impossible to determine the true overhead cost associated with the overhead resources consumed to manufacture individual products produced. The factory resources included in overhead are an important component of manufacturing product. Overhead costs have traditionally been allocated to products using allocation bases which are correlated to the incurrence of cost such as direct labor hours, direct labor cost, or machine hours using one or few plant-wide allocation base for this purpose. The resulting product costs are used for external financial reporting and are also often used internally as a source of information for management decisions. The information provided by traditional cost systems is often so inaccurate it causes managers to do the wrong things. Further, traditional product costing offers little help to managers in their efforts to reduce costs. Activity based costing is a technique that allocates cost based on activities and volumes that cause cost. The use of these cost causes, called cost drivers, significantly increases product cost accuracy and also encourages managers to take cost-cutting actions that result in true cost savings to the firm. This paper will explore activity based costing and how it can help manufacturers to increase product cost accuracy and to reduce costs.

A Linear Programming Approach to Optimization of Ship Design and Construction Phases

Labor cost savings can be obtained by considering the effect of design rework on the degree of overlap of the ship design and construction phases. Based on data from a shipbuilding case study, a linear programming (LP) model was developed to investigate the optimum overlap of the design and construction phases. Two scenarios were modeled. The case study's start-up period, which involved design and the construction of four ships, and a hypothetical small batch program to determine the degree of overlap and total hours required for a new shipbuilding program. In each scenario, the LP model found the optimum overlap period for design and construction and the associated total hours. In the first scenario, the analysis demonstrates that by reducing the amount of overlap between the design and construction phases, a reduction in construction direct labor hours can be achieved while obtaining the overall duration and scheduled completion times. In the second case, the analysis recommends a zero overlap policy between the design and construction phases to minimize total hours while achieving the overall schedule duration. When compared with the actual case study results, the zero overlap policy estimates an $8 million saving. The analysis supports the policy to complete design activities with construction-dependency relationships before starting construction.

Cost-allocation decisions in member controlled country clubs: A case analysis

Abstract Boca Vista Golf and Country Club (BVGCC), which operates as a not-for-profit organization, is a member-owned country club in South Florida. Since no mark-up for profit is included in member-owned clubs, total budgeted revenues (including member dues) must equal total budgeted costs. Accordingly, if net costs are used to determine dues for each membership category, cost-allocation decisions have a direct impact on member dues (product price). BVGCC is also subject to competitive pressures from public and semi-private golf courses. The case provides an overview of these competing forces and requests the service of a consultant to devise equitable and effective cost-allocation schemes for BVGCC. Completion of the case should increase understanding of cost allocations that are cost-driver (direct labor hours) based and incremental cost driven, highlight the manner in which these decisions affect product price, and highlight the manner by which dues are often determined in practice, such as on the basis of what the market can bear.

Why Does Cell Implementation Stop? Factors Influencing Cell Penetration in Manufacturing Plants

There is little understanding as to why firms have various degrees of cell usage. The intent of this study was to identify factors that had arrested continued implementation of cells at surveyed manufacturing plants. We found no dominant factor that had prevented the firms from continued cellularization. However, by sub‐dividing the plants into those with low and high degrees of direct labor hours spent in cells, short and long experience with cells, and those with and without plans for further cells, a clearer pattern emerged. The inability to find families with high and stable demand, lack of time to implement more cells, the existence of service processes, and the difficulty of cost justifying new cells were the most important factors, although their relative importance varied. The findings support the notion that cellular manufacturing has broad applicability as a form of work organization and that cell users pursue further implementations until no more viable cells with sufficient utilization, demand stability, or economic value can be found.

The Impact of Product Variety on Automobile Assembly Operations: Empirical Evidence and Simulation Analysis

This study examines the impact of product variety on automobile assembly plant performance using data from GM's Wilmington, Delaware plant, together with simulation analyses of a more general auto assembly line. We extend prior product variety studies by providing evidence on the magnitude of variety-related production losses, the mechanisms through which variety impacts performance, and the effects of option bundling and labor staffing policies on the costs of product variety. The empirical analyses indicate that greater day-to-day variability in option content (but not mean option content per car) has a significant adverse impact on total labor hours per car produced, overhead hours per car produced, assembly line downtime, minor repair and major rework, and inventory levels, but does not have a significant short-run impact on total direct labor hours. However, workstations with higher variability in option content have greater slack direct labor resources to buffer against process time variation, introducing an additional cost of product variety. The simulation results support these findings in that once each workstation is optimally buffered against process time variation, product variety has an insignificant impact on direct assembly labor. The simulations also show that bundling options can reduce the amount of buffer capacity required, and that random variation is more pernicious to productivity than product variety, supporting the efforts of some auto makers to aggressively attack the causes of random variation.

Activity-Based Costing: A Manufacturing Management Decision-Making Aid

Serious distortion can occur in manufacturing product costing systems that use a single volume-related base (like direct labor hours) to assign overhead costs to products. Activity-based costing (ABC) assumes that activities consume resources, and products consume activities; hence, ABC makes activities its focus. Costs are traced from activities to products based on demand for the focus activity (or activities). Conventional cost systems are imprecise due to the lack of detail in the allocation of overhead. In contrast, ABC provides more accurate product cost because it captures many dynamic variables while assigning overhead costs through defined activities.

The Impact on Economic Performance of a Transformation in Workplace Relations

This study examines how a transformation in patterns of conflict and cooperation affected economic performance in 25 work areas of a large, unionized manufacturing facility in the period 1984–87. Unlike most studies of industrial relations and economic performance, this study clearly distinguishes conflict from cooperation but evaluates the two together, rather than focusing on only one. An analysis of data collected from union and employer records and interviews strongly suggests that work areas with “traditional” labor-management relations, rooted in adversarial assumptions, had higher costs, more scrap, lower productivity, and a lower return to direct labor hours worked than work areas with “transformational” relations, characterized by increased cooperation and improved dispute resolution.

Overloaded overheads: Activity‐based cost analysis of material handling in cell manufacturing

AbstractManufacturing managers today are pressed by aggressive international competitors, high input factor prices, and customers who demand better quality at lower cost. In such an environment, there is a growing need to exploit the time, cost and quality advantages of cell manufacturing (Hyer and Wemmerlöv (1984)). Unfortunately, traditional cost accounting systems may be a major roadblock on the highway to future manufacturing competitiveness. These systems may stifle manufacturing initiatives to improve process design by providing inaccurate cost information. They may also send the wrong signals to managers who must evaluate the cost/benefit impact of process innovation (such as cells and group technology implementation), thereby causing companies to retain outmoded, inefficient manufacturing practices.We discuss the results of our field study which illustrates the use of activity‐based costing (ABC) to quantify the benefits of cell manufacturing and synchronized process flows. Auto Light Company, a Fortune 500 automobile components manufacturer, had begun to replace its functional layout with synchronous manufacturing cells. Although dramatic progress had been made in operational measures (such as throughput time, work‐in‐process (WIP) inventories, and material flow distance), existing accounting systems failed to trace these savings to the source, namely the change in manufacturing practices. Overheads were being allocated to products on the basis of direct labor or machine hours, which at Auto Light are no different in cells than in traditional manufacturing.A joint Auto Light management/Carnegie Mellon University team examined the impact of cell manufacturing on major cost categories. The group identified material handling expenses (which exceed $5,000,000 per year, and comprise approximately 10% of total factory costs) as a promising area for analysis using ABC principles. We sought to identify relevant material handling cost drivers: that is, activities that (1) create costs and (2) seem reasonable to use as proxies for assigning costs to products. Interviews, plant records and time‐and‐effort studies pointed to “number of moves” and “distance moved” as key drivers of material handling costs. Annual production volumes, physical dimensions of products and their production routings were used to calculate the number of moves, and the distance

Cost Finding and control for Flexible Manufacturing Systems

The use of robots to supplant direct labor, automated materials handling, computer controlled flexible manufacturing systems which are capable of producing a number of products within the same product line, and just‐in‐time production and distribution are creating a new manufacturing environment. As in the past, the need for assignment and control of direct material costs remains; however, the allocation and control of conversion costs can no longer be based on direct labor hours or labor costs. Further, since different products are produced in the same assembly line, the allocation and control of conversion costs, based on the materials used or units produced, is not possible. A machine cost per minute is, therefore, developed in order to allocate conversion costs to products and effectuate control over such costs.

Impurity of variable factory overhead variances

Variable factory overhead variances are often analyzed in the same manner as other variable costs variances, using direct labor hours as a surrogate activity measure. As a result, students tend to give the same interpretations to both direct labor variances and variable factory overhead variances. Using a simple example, this paper demonstrates that as conventionally analyzed a variable factory overhead spending variance may reflect not only price deviations, but also quantity deviations of which students must be aware if they are to fully understand overhead variance analysis.