jackson manufacturing company case study

Case Study Jackson Manufacturing Company Kathleen McFadden, vice president of operations at Jackson Manufacturing

Jackson Manufacturing Company

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 JT 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 the 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 workstation 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 will 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 \(\mathbf{t}\) address several factors:

• How big should the sample be for a statistically accurate standard (at, say, the \(99.73 \%\) confidence level and accuracy of \(5 \%\) )?
• Is the sample size adequate?
• How many units should be produced at this workstation per day
• What is the cost per unit for this task in direct labor cost?

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Chapter 10 Human Resources Case Study on Jackson Manufacturing...

Chapter 10 Human Resources

Case Study on Jackson Manufacturing Company page 437

Please read the case study and answer the following questions. 

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? 

Answer & Explanation

1.) Sample Size for Statistically Accurate Standard: To determine an appropriate sample size for a statistically accurate standard at a 99.73% confidence level with a margin of error of +/- 5%, you need to use a sample size calculation formula. This formula considers the desired confidence level, margin of error, and the estimated proportion of the population with the characteristic of interest. The exact sample size will depend on the specific context of the case study.

2.) Adequacy of Sample Size: To determine if the sample size used in the case study is adequate, you should compare the actual sample size to the calculated sample size using the formula mentioned in question 1. If the actual sample size is greater than or equal to the calculated sample size, it is considered adequate for statistical reliability.

3.) Daily Production Quantity: The number of units that should be produced at a workstation per day depends on factors like demand, available working hours, production efficiency, and any production constraints. Specific information from the case study is required to make this determination.

4.) Cost per Unit in Direct Labor: To calculate the cost per unit in direct labor, you need data on the total direct labor cost and the total number of units produced. The formula is: Cost per unit = Total Direct Labor Cost / Total Number of Units Produced. Actual cost and production data from the case study are necessary to calculate this cost accurately

To determine the sample size needed for a statistically accurate standard, you'll typically use a formula for sample size calculation based on your desired confidence level and margin of error. The formula for sample size calculation is as follows:

n = (Z^2 * p * (1 - p)) / E^2

• n is the required sample size.
• Z is the Z-score corresponding to your desired confidence level (e.g., for 99.73%, Z is approximately 2.75).
• p is the estimated proportion of the population that possesses the characteristic of interest.
• E is the desired margin of error (in this case, +/- 5%).

You'll need to estimate the value of "p" based on the characteristics you're studying and the specific context of the case study.

Compare the calculated sample size from the formula in question 1 to the actual sample size used in the case study. If the actual sample size is greater than or equal to the calculated sample size, it can be considered adequate. If it's smaller, then the sample size may not be statistically reliable.

To determine the number of units that should be produced at this workstation per day, you'll need information about the demand, production capacity, and other relevant factors. You should consider the following:

• The demand for the product.
• The available working hours per day.
• The efficiency of the workstation or production process.
• Any constraints or limitations in the production process.

To calculate the cost per unit for this task in direct labor cost, you'll need information on the total direct labor cost and the total number of units produced. The formula is:

Cost per unit = Total Direct Labor Cost / Total Number of Units Produced

You'll need to obtain the actual cost data and production data from the case study to perform this calculation accurately.

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