FIRST NATIONAL BANK

Group - 5
Case Facts
 First National Bank (FNB) has major
commitment to lock box operations. Its
customers include major oil companies,
national retailers, large credit company etc
 Customers make payments directly to FNB
using a special zip code
 Theoretically, the entire process of
intercepting the payment, processing
paper work and crediting customer’s
account finishes within a day
 Every day FNB receives thousands of bills
and payments for hundreds of customers
resulting in as much as 3-day backlog


 Afraid of losing two major customers, FNB

appointed a team to study jobs and set
performance standards.
 The key job is of the account processor who
opens incoming mail, verifies payment
with the bill, records payment by account
number, separates payments and bills, and
delivers each for further processing.
 A new concern is that setting a standard
would further damage performance. In fact
the day after the study absenteeism was
14 out of 35 which is quite higher than the
 The team performed both a direct time study
and work sample for the processor job, the
results are shown further.
 Frank Waring, the operations VP, would like
to change the entire work flow, dissolving
the lock box department and focusing on
customer rather than on product.
 Frank is not gathering the support he had
anticipated from his team of management
subordinates.
 So he has to prove that such a change would
work by showing them a detailed time
study and work sampling analysis.
Work Measurement
 Work measurement (WM) is the application
of techniques designed to establish the
time for a qualified worker to carry out
specified jobs at a defined level of
performance.
 WM is concerned with investigating, reducing
and eliminating ineffective time, whatever
may be the cause.
 WM is the means of measuring the time
taken in the performance of an operation
or series of operations in such a way that
the ineffective time is shown up and can
be separated out.
 WM is also used to set standard times to
carry out the work, so that any ineffective
Techniques for WM
 Time study
 Activity sampling; and rated activity
sampling
 Synthesis from standard data
 Pre-determined motion time system
 Estimating
 Analytical estimating
 Comparative estimating
Time study
 A WM technique for
 Recording the times and rates of working
for the elements of a specified job
carried out under specified conditions,
 Analyzing the data so as to obtain the
time necessary for carrying out the job
at a defined level of performance.

Formulae used in time
study method
 Average cycle time = sum of cycle times
recorded /no of cycles observed
 Normal time = average cycle time *
workers rating
 Allowance fraction = fraction of time for
personal needs, fatigue, unavoidable
delays
 Available fraction of time = 1-allowance
fraction
 Standard time = normal time /available
fraction of time
Work sampling
 Work sampling does not involve stop
watch measurement, instead, it is
based on simple random sampling
techniques derived from statistical
sampling theory. The purpose of
sampling is to estimate what proportion
of a workers time is devoted to work
activities.
Formulae used in work
sampling
 P = no of observations during which
working occurred / total no of
observations
 Normal time = (total observation time *
percent of time worker observed
working * worker rating) / no of units
produced
 Available fraction of time = 1-allowance
fraction
 Standard time = normal time /available
fraction of time
Direct time study: Acct
Processor Job
Processor 1 Processor 2
Cycle 0.5 0.7 1.0 1.3 1.5 0.5 0.7 1.0 1.5 2.0
Time (
in
mins)
No of 1 3 5 2 1 2 4 3 1 1
times
observ
ed

Perfor 85% 80%

mance
rating
Work sampling data: Acct
Processor job
Processor 1 Processor 2

No of payments 322 296

processed
Length of time 8 8
observed(in hrs)

Performance rating 85% 80%

Idle time 25% 30%

 Calculations: Direct time
study
 Available fraction of time = 1-0.15 = 0.85

P1 P2

Average Cycle Time {(0.5*1)+(0.7*3)+(1* {(0.5*2)+(0.7*4)+(1*

5)+(1.3*2)+(1.5*1)}/1 3)+(1.5*1)+(2*1)}/11
2 = 0.975 = 0.9363

Normal Time 0.975 * 0.85 = 0.9363 * 0.8 =

0.82875 0.74904
Standard Time 0.82875/0.85 = 0.975 0.74904/0.85 = 0.8812
 Calculations: Work sampling
 Available fraction of time = 1-0.15 = 0.85

P1 P2

Normal Time (8*60*0.75*0.85)/322 (8*60*0.7*0.8)/296 =

= 0.9503 0.9081

Standard Time 0.9503/0.85 = 1.118 0.9081/0.85 = 1.0683

Conclusion1:
 As can be seen from the calculations,
there is a difference of:
 For Processor P1: Difference in standard
time from both the methods = 0.143
 For Processor P2: Difference in standard
time from both the methods = 0.1871
 This shows that both the WM techniques
give almost the same results.




Conclusion2:
 As can be seen from the calculations for
both time study and work sampling, the
standard time of Processor 2 is better
compared to that of Processor 1, which
implies that Processor 2 should be
preferred over Processor1 for the
account processor job.


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THANK
YOU