Cost Performance of Automobile Engine Plants
This paper analyzes the basic performance of 27 automobile engine lines operated by 18 companies on three continents, based on questionnaire data gathered in the Spring and Fall of 1995. Engine plants differ from assembly plants in being very capital-intensive. Thus a traditional ?hours/engine?...
| Main Authors: | , , |
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| Language: | en_US |
| Published: |
2002
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| Subjects: | |
| Online Access: | http://hdl.handle.net/1721.1/683 |
| _version_ | 1826210469143117824 |
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| author | Artzner, Denis Peschard, Guillermo Whitney, Daniel |
| author_facet | Artzner, Denis Peschard, Guillermo Whitney, Daniel |
| author_sort | Artzner, Denis |
| collection | MIT |
| description | This paper analyzes the basic performance of 27 automobile engine lines
operated by 18 companies on three continents, based on questionnaire data
gathered in the Spring and Fall of 1995. Engine plants differ from assembly
plants in being very capital-intensive. Thus a traditional ?hours/engine?
metric of performance is inappropriate. Here a composite cost comprising
labor and amortization of capital, accounting for downtime, is used to
compare plant performance. We find that performance varies widely, even
for similar engines. Cost drivers comprise number of workers, capital
invested, and efficiency (fraction of scheduled time actually used for
production). The drivers are in turn driven by external factors out of the
plant?s control and internal factors that are under its control to some degree.
We find that about half the variance in cost is due to the external factors, such
as number of cylinders, utilization of scheduled time, and number of variants
of engine made (the last loosely related to age of the engine family). Internal
factors such as work in process inventory (strongly) and age of the workers
(somewhat) drive cost. Downtime, the reverse of efficiency, is itself divided
into scheduled and unscheduled downtime; the former is driven largely by
number of variants while the latter is driven to some degree by the age of the
family. The results of this study include a methodology to estimate the cost of
variety. Statistical analyses are used to calculate the additional cost of
machining blocks ($4.92 more per block, $15 million extra investment, 9
additional workers and -4?40 operating efficiency associated with one
additional square root of number of variants). This methodology can be
extended to create a cost of variety for an entire engine. |
| first_indexed | 2024-09-23T14:50:22Z |
| id | mit-1721.1/683 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:50:22Z |
| publishDate | 2002 |
| record_format | dspace |
| spelling | mit-1721.1/6832019-04-12T08:09:19Z Cost Performance of Automobile Engine Plants Artzner, Denis Peschard, Guillermo Whitney, Daniel capital expense cost performance plant This paper analyzes the basic performance of 27 automobile engine lines operated by 18 companies on three continents, based on questionnaire data gathered in the Spring and Fall of 1995. Engine plants differ from assembly plants in being very capital-intensive. Thus a traditional ?hours/engine? metric of performance is inappropriate. Here a composite cost comprising labor and amortization of capital, accounting for downtime, is used to compare plant performance. We find that performance varies widely, even for similar engines. Cost drivers comprise number of workers, capital invested, and efficiency (fraction of scheduled time actually used for production). The drivers are in turn driven by external factors out of the plant?s control and internal factors that are under its control to some degree. We find that about half the variance in cost is due to the external factors, such as number of cylinders, utilization of scheduled time, and number of variants of engine made (the last loosely related to age of the engine family). Internal factors such as work in process inventory (strongly) and age of the workers (somewhat) drive cost. Downtime, the reverse of efficiency, is itself divided into scheduled and unscheduled downtime; the former is driven largely by number of variants while the latter is driven to some degree by the age of the family. The results of this study include a methodology to estimate the cost of variety. Statistical analyses are used to calculate the additional cost of machining blocks ($4.92 more per block, $15 million extra investment, 9 additional workers and -4?40 operating efficiency associated with one additional square root of number of variants). This methodology can be extended to create a cost of variety for an entire engine. This study was sponsored by the International Motor Vehicle Program. The authors gratefully acknowledge its support. 2002-06-06T18:22:52Z 2002-06-06T18:22:52Z 2002-06-06T18:22:52Z http://hdl.handle.net/1721.1/683 en_US 2144483 bytes application/pdf application/pdf |
| spellingShingle | capital expense cost performance plant Artzner, Denis Peschard, Guillermo Whitney, Daniel Cost Performance of Automobile Engine Plants |
| title | Cost Performance of Automobile Engine Plants |
| title_full | Cost Performance of Automobile Engine Plants |
| title_fullStr | Cost Performance of Automobile Engine Plants |
| title_full_unstemmed | Cost Performance of Automobile Engine Plants |
| title_short | Cost Performance of Automobile Engine Plants |
| title_sort | cost performance of automobile engine plants |
| topic | capital expense cost performance plant |
| url | http://hdl.handle.net/1721.1/683 |
| work_keys_str_mv | AT artznerdenis costperformanceofautomobileengineplants AT peschardguillermo costperformanceofautomobileengineplants AT whitneydaniel costperformanceofautomobileengineplants |