In this article I will explain how to calculate the machine hour rate you have saved by implementing some improvements in an operation of a machine.
Suppose the present output of a machine is 120 per hour. And you have done some improvement in the operation of a machine and increased the hourly output to 145, without increasing any input. So increase in the output per hour is 25 nos.
Machine minutes required per product before improvement = 60/120
= 0.5
Machine minutes required per product after improvement is = 60/145
= 0.4137
Machine minutes saved per product = 0.5 – 0.4137 = 0.0863
Suppose the demand of the product per month is 200000.
Machine minutes saved per month is 0.0863 x 200000 = 17260
Cost per hour of the machine is Rs 100.
Cost for one machine minute = 100/60 = Rs. 1.66
So total savings per month = 1.66 x 17260
Which is Rs. 28651/-
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Very useful topic
Encouraging
Very useful..
Good explanation. Hope OEE is factored in output per hour before and as well after improvement cases.Else we need to factor it to monthly savings.