Overall Equipment Effectiveness

Theoretical Available time (24 hrs; 7 days) = 168 hours/week maximum

Total available time scheduled

Unplanned Planned
Downtime Downtime

Actual Availability
(plant operating time)
Performance rate
(net operating time)
Yield-quality

OEE = %

Scheduled Losses
Lunch
/
break
s

Vacations Excess
weekends capacity

Speed
losses

Defect
losses
Overall Equipment Effectiveness = Availability x Performance x Quality
Benchmarks = 65% - 85% (Discrete) and 85% - 95% (Continuous Process)

OEE
Availability * Performance Rate * Quality Rate = OEE
Required Availability - Downtime / Required Availability
*100 = Availability
Design Cycle Time *Output / Operating Time *100 =
Performance rate
Production Input - Quality Defects / Production Input * 100
= Quality rate

Maintenance Development
Maximum Efficiency/OEE
Operator Driven Reliability (ODR)

OEE
>90%

Proactive Reliability Maintenance (PRM)

OEE
80%-90%

Predictive Maintenance (PdM)

OEE
60%-80%

Preventive Maintenance (PM)

OEE
40%-60%

Reactive/Corrective

OEE
<40%

Minimum Efficiency/OEE
(OEE = Overall Equipment Effectiveness)

Payback
Payback simply determines the number of years that are
required to recover the original investment. Thus, if you
pay $50,000 for a test instrument that saves downtime
and increases production worth $25,000 a year, then the
payback is:

$, 50,000 / $ 25,000 = 2 Years

Percent Rate of Return (PRR)

Percent rate of return is a close relation of
payback that is the reciprocal of the payback
period. In our case above:
$ 25,000 / $ 50,000 = 0.5 = 50% rate of return

Return on Investment (ROI)

Return on investment is a step better because
it considers depreciation and salvage
expenses and all benet periods. If we acquire
a test instrument for $80,000 that we
project to have a ve-year life, at which time it
will be worth $5,000, then the cost
calculation, excluding depreciation, is:

Return on Investment (ROI)

($80,000-$5,000) / 5 years = $15,000/ year
If we can benet a total of $135,000 over that
same ve years, then the average increment
is:
$135,000 - $ 75,000 = $ 60,000 / 5 years = $
12,000 per year
The average annual ROI is:
$75, 000 / $ 135,000 = 0.55 = 55%

CostBenet Ratio (CBR)

The costbenet ratio takes the present value
(initial project cost + NPV) divided by
the initial project cost. For example, if the
project will cost $250,000 and the NPV is
$350,000, then:
$ 250,000 + $ 350,000 / $ 250,000 = 2.4

PV
PV = FV / (1+r)n
PV is Present Value
FV is Future Value
r is the interest rate (as a decimal, so 0.10,
not 10%)
n is the number of years

Present Value
Calculate Present Value of $900 in 3 years
PV = FV / (1+r)n
PV = $900 / (1 + 0.10)3 = $900 / 1.103 =
$676.18

PV

NPV

NPV

Example: Invest $2,000 now, receive 3 yearly payments of $100 each,

plus $2,500 in the 3rd year. Use 10% Interest Rate.

Let us work year by year (remembering to subtract what you pay out):
PV = FV / (1+r)n
Now: PV = - $2,000
Year 1: PV = $100 / 1.10 = $90.91
Year 2: PV = $100 / 1.102 = $82.64
Year 3: PV = $100 / 1.103 = $75.13
Year 3 (final payment): PV = $2,500 / 1.103 = $1,878.29
Adding those up gets: NPV = -$2,000 + $90.91 + $82.64 + $75.13 + $1,878.29
= $126.97
Looks like a good investment

NPV
Example: A friend needs $500 now, and will pay you back $570 in a year.
Is that a good investment when you can get 10% elsewhere?
Money Out: $500 now
You invested $500 now, so PV = -$500.00
Money In: $570 next year
PV = $570 / (1+0.10)1 = $570 / 1.10 = $518.18 (to nearest cent)
The Net Amount is:
Net Present Value = $518.18 - $500.00 = $18.18
So, at 10% interest, that investment is worth $18.18
(In other words it is $18.18 better than a 10% investment, in today's money.)