To estimate the cost associated with rework, each team member took responsibility for one of the rework loops. The assignment was twofold: (1) conduct a two-week study to tally the number of invoices that go through that rework loop, and (2) take the detailed rework activities, identify who is involved, and determine how much time is spent in that activity.
We decided against performing a detailed time-and-motion study. Instead, we agreed that reasonable estimates could be generated by the jury method”simply ask the people involved to come up with a consensus estimate of the time it takes to complete the activity.
To convert these time estimates into dollars, one of the team members volunteered to meet with someone from the personnel department to determine the average salaries of the various clerks, supervisors, and managers who get involved in the rework loops. (We have a number of clerical salary levels in our company, and we designate them as Grade 1, Grade 2, etc., with the higher salaries going to the higher grades.)
We have conducted our studies and are meeting again. Today, we will be analyzing our problem tallies and time estimates. (See the accompanying table of data. The first line has the number of invoices processed in the rework loop. The next lines are the number of minutes required per invoice for each person to do the rework. Note that some of the calculations have been completed for you.)