# Calculating Productivity and Efficiency

Six Sigma – iSixSigma Forums Old Forums General Calculating Productivity and Efficiency

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• #46793

jimbo
Participant

Looking for away to calculate productivity and efficiency. Does the following make sense:
Productivity = # of product completed x standard / # of employees x hours paid or 8
Efficiency = # of Product completed x standard / # of employees x hours working on product (Subtract breaks)
Any help would be appreciated.

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#155103

Rpaul
Member

Dont wanna assume anything so want to get this clear:
In your formula.. what exactly do you mean by “standard”??

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#155104

Rpaul
Member

Hardly any difference between the two formulae except for the breaks.
Productivity formula seems simple and alright. Just that I would suggest you include break times in the formula for productivty.
However, for “Efficiency” I think you should take into account the number of defects/defectives.

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#155113

Member

Productivity = no of items produced *(std time required to produce one item)/ total time spent to produce n items
for efficiency — you would have to first decide as to what do you want to track as efficiency… is it based on time spent to produce goods or the efficiency of the output.

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#155115

jimbo
Participant

This would be the amount of time given to complete a task, job, etc.
Thanks

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#155116

jimbo
Participant

Any input on how I could include defects / defectives in the efficiency formula?

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#155117

Member

In that case you %age efficiency could be calculated as
standard time required to complete a job/ actual time taken(productive time) which would give a value no different from productivity.

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#155119

Allthingsidiot O
Participant

Does Productivity  stand  for  “Effectiveness”??

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#155123

Member

Ideally that could be calculated as:
No of non defect free items produced*(standard time)/ total time taken to produce all items.

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#155125

Rpaul
Member

Calculating efficiency from units produced and defectives.

Let Total No. of Items be:                                    N
Let No. of Defective Items be:                              d
Let Standard time to produce one item be:           t
Let Total time to produce N items be:                  T

Now let us calculate what ratio of our production is actually usable / selleable. Lets call it Effective Production Ratio.

Let Effective Production Ratio be:                        R
Calculate Effective Production Ratio (R)   as         = (Total No. of Items  No. of Defective Items) / Total No. of Items
Therfore; Effective Production Ratio (R)                = (N-d)/N

Productivity (P) = (Total No. of Items * Standard time to produce one item) / Total time to produce N items
= ( N * t ) / T

Efficiency (E)    = Productivity * Effective Production Ratio = P * R
= (Total No. of Items * Standard time to produce one item * Effective Production Ratio) / Total time to produce N items
= ( N * t * R ) / T

I used the symbols to avoid making mistakes. Excuse me if the above is a little too mathematical.

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#155128

Member

R Paul,
Thats really, good. These metrics have to be expressed as mathematical equations…

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#155135

CT
Participant

I copied this from http://www.oee.com, since your wanting to include defects into the equation this is the best way to accomplish your goal. More information at the web site, but I think this will help. In your other post you mentioned a standard, I assume this already takes into account breaks, normal tool changes, and adjustments?

Calculating OEE
The Formulas
As described in World Class OEE, the OEE calculation is based on the three OEE Factors: Availability, Performance, and Quality. Here’s how each of these factors is calculated.
Availability
Availability takes into account Down Time Loss, and is calculated as:

Availability = Operating Time / Planned Production Time
Performance
Performance takes into account Speed Loss, and is calculated as:

Performance = Ideal Cycle Time / (Operating Time / Total Pieces)
Ideal Cycle Time is the minimum cycle time that your process can be expected to achieve in optimal circumstances. It is sometimes called Design Cycle Time, Theoretical Cycle Time or Nameplate Capacity.Since Run Rate is the reciprocal of Cycle Time, Performance can also be calculated as:

Performance = (Total Pieces / Operating Time) / Ideal Run Rate
Performance is capped at 100%, to ensure that if an error is made in specifying the Ideal Cycle Time or Ideal Run Rate the effect on OEE will be limited.
Quality
Quality takes into account Quality Loss, and is calculated as:

Quality = Good Pieces / Total Pieces
OEE
OEE takes into account all three OEE Factors, and is calculated as:

OEE = Availability x Performance x Quality

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#155138

Wayne Marhelski
Member

CT identified a very useful tool (OEE). While this measurement is usually applied on a piece of equipment, it works just as well for a workcell, assembly line, or even a single station on an assembly line. How you use it all depends on whether you want a micro or macro perspective.
Wayne

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#155167

jimbo
Participant

Very interesting information. I will start plugging in numbers and see what happens. Much appreciated. Thanks to everyone who replied!

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#155298

Ronald
Participant

I my experience two metrics are used:
1. Productivity= units per paid labor hour (a measurement of labor efficiency).  This should be compared to the standard rate per labor hour.  A labor efficiency % could be calculated by dividing the two numbers.
2. OEE has described in the previous post to determine the machine effectiveness.
The two numbers are needed especially if you can overstaff a line and produce higher efficiency.  It also helps to guide continuous improvements in terms of downtime reduction, speed improvements, line staffing, process delays, and lean activities such cell layout, SMED, and 5S.

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#155316

Alderman
Participant

Use the K.I.S.S. Method:
Productivity = the number of units / number of units scheduled.
Efficiency = the standard / the time it actually took
with the quality efficiency you would want to take the total number defectives / by the total number of units
just my 2 cents worth.

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#187341

Tonny
Member

What means standard in your formulas ?
When you say hours paid do you refer to the required hours to build the number of products ccompleted ?
Thank you!
Tonny

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#187345

Mikel
Member

It’s a 2 1/2 year old post. Go to Lean.org and read about OEE, it is a
real simple concept.

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#187799

Tonny
Member

I want to find a suitable formula to express productivity at my work place.I need to use in my formula the number of labours, hours spent to bild the products. Any help is apprecciated

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#189103

Surendran
Member

What is meaning of std in productivity calculatuion

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