Operation rates

An operation rate is a rate determined by labor costs, machine costs, or overhead costs. Operation rates are defined in the Operation Rates (ticpr1150m000) session, where these rates are linked to a cost calculation code and an operation rate code. The operation rates are registered by means of cost components of the Operation Costs type.

Note

  • Labor Setup is only applicable if the Job Shop by Site parameter is set to Active in the Implemented Software Components (tccom0100s000) session.

  • Project items are treated the same as standard items. No project related operation rates are applied. To define specific project operation rates, you must define a non-standard cost calculation code for the project.

Five types of operation rates exist:

  • Labor (average costs of one hour of labor).
  • Machine (average costs for a machine for one hour).
  • Overhead on Man Hours (indirect costs for one hour of labor).
  • Overhead on Machine Hours (indirect costs for a machine for one hour).
  • Labor Setup (costs of setting up for production)

For various operation cost types, the amounts are calculated as follows:

  • Labor Setup

    : Labor Setup Resources (FTE) * Setup (h) * Rate

  • Labor

    Labor Resources (FTE) * Run (h) * Rate (in which Run (h) = Cycle Time * Order Quantity)

  • Labor Overhead
    : Labor Resources (FTE) * Run (h) * Rate (in which Run (h) = Cycle Time * Order Quantity)
  • Machine
    (Setup (h) + Run (h)) * Number of Machines * Rate
  • Machine Overhead
    (Setup (h) + Run (h)) * Number of Machines * Rate
Note

A different order quantity is used in the calculation for different types of items:

If the order quantity of the project item is 0, the standard costs by project have not been calculated. You can use the Calculate Standard Costs by Project (tipcs3250m000) session to manually calculate the costs.

If the order quantity of the project item is not known, LN uses the order quantity 1 in the operation cost calculations the results of which are displayed in the Operation Cost Analysis (tirou4101m100) session.

Operation Rates With Job Shop by Site Active

If the Job Shop by Site parameter is set to Active in the Implemented Software Components (tccom0100s000) session, the operation rates are retrieved from the Operation Rates (ticpr1151m000) session.

The operation rates are applied directly to production orders by operation cost type.

Operation rates are defined on six levels:

  • Actual rates

    These rates are defined at employee level, only labor and labor setup rates. They only apply to actual hours, not to estimates.

    Note: These employee-level rates do not apply to the standard cost calculation.

  • Manufacturing projects

    Note: Only for applicable customer specific products.

    These rates are defined at project level specifically for customized project items with a project specific cost calculation code for the project.

  • Reference operation

    The reference operation is a combination of reference operation code, machine type, work center and site.

  • Machine capacity group

    Rates are defined for the combination of machine type, work center and site.

  • Work center

    The work center of the machine capacity group.

  • Production department

    The rates are defined by the production department's calculation office.

When no rate for an operation type is found, LN interprets this as zero.

Note

The search goes from detailed to global. LN will use the first operation rate type found, levels above the one where the operation rate is found are ignored. This means different operation rates can be retrieved from different levels.

Neither Repetitive Manufacturing and Assembly Control have reference operations nor machine capacity groups.

Managing Existing Operation Rates in the Operation Rates (ticpr1151m000) session

If you need to change the data for an existing rate with the Approved field set to Yes:

  1. Select the operation rates row you want to copy.

  2. Copy the selected row.

    The new row retains the sequence, description and type of operation costs of the source row.

    The new row has the Approved field automatically set to No.

    You can manage the rest of the data, such as rate and cost component. You can also alter the effective date for the changed rate.

  3. Use the Approve command, once you have made all the changes, to change the status of the Approved field to Yes. LN will automatically set the expiry date of the previous, approved row with the same cost calculation code, operation rate code, site and sequence to the effective date of the newly approved rate.
Operation Rates With Job Shop by Site Inactive

For operation rate lines sequence numbers are defined, which allows for multiple operation rate lines. You can define a maximum of 999 lines for each operation rate.

The operation rate code with accompanying operation rates is linked to a work center in the Work Centers (tirou0101m000) session, and/or to a work center/task relationship in the Task Relationships (tirou0104m000) session.

Whether the operation rates linked to the work center or to the work center/task relationship are used for cost calculation depends on the setting of the Type of Operation Rates field in the Standard Cost Calculation Parameters (ticpr0100m000) session.

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