If during the week there are day time allowances of 7 hours, then there are 41 reward hours and 7 day time hours.
The effect of making day time allowances is to increase the reward, as will be seen from the following example:
Assume that during 20 hours 500 small pieces are produced, and that the machine stops 4 hours out of the 20. If the production be spread over the whole 20 hours and reward production be 24 per hour, the reward quantity is 20 × 24 = 480. Reward is therefore paid on 500-480 = 20 pieces. If the 4 hours be deducted, the net time on reward is 16 hours, not 20, and the reward quantity for the 16 hours is 16 × 24 = 384. Reward is paid on 500-384 = 116 pieces, instead of 20. Let the job rate be 8d. per hour. Then, as the reward production is 24 per hour, this means that the worker receives 8d. for each 24 pieces; the reward on 20 pieces at 24 for 8d. = 6½d., while the reward on 116 pieces = 3s. 3d. This shows how important it is to get the proper day time allowances. The 4 hours are, of course, paid for at the worker's day rate.
(g) Efficiency Calculation.
Efficiency is the percentage ratio between the time it takes to do the job and the standard time. Or, if we are dealing with quantities, the percentage ratio between the quantity actually produced in a certain time and the standard quantity which ought to be produced in that time.
The standard time or standard quantity is considered to be 100 per cent. efficiency, as we have seen.
If the standard time for a job be 12 hours, and the worker does it in 12 hours, his efficiency is 12/12 × 100 = 100 per cent. Suppose he does the job in less than 12 hours, then it is quite clear that his efficiency is more than 100 per cent. Say he does it in 10 hours; his efficiency is (12 × 100)/10 = 120 per cent. If he takes longer than standard time, his efficiency is less than 100 per cent. Say he does it in 15 hours; his efficiency is (12 × 100)/15 = 80 per cent. Reward time is 12 + 33⅓ per cent. of 12 = 12 + 4 = 16 hours. Suppose the worker takes the reward time of 16 hours to do the job; his efficiency is (12 × 100)/16 = 75 per cent. This efficiency is the ratio between reward time and standard time, and that is why we say the efficiency point for reward is 75 per cent.
Rule I.—In order to calculate efficiency on a time basis, the standard time must be multiplied by 100 and the result divided by the actual time.
In dealing with small parts, the basis is the standard quantity per hour—in other words, the quantity which ought to be produced in one hour in order to reach 100 per cent. efficiency.