Widget Production Executive Summary

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 27% 1% 7%

Physical Lifting 42 12 23

People Required 17 6 9

Productivity 208 392 288

Worker's Comp Claims 4 0.3 1.9

Capital Investment $ - $ 1,300,000 $ 967,000

Life of Equipment 7 5

Wages Per Shift $ 5,848 $ 2,064 $ 3,096

Wage Per Year (260 working days) $ 1,520,480 $ 536,640 $ 804,960

Cost of Worker's 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 0 $ 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 Worker's 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 Worker's 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 Worker's 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