Dynamic threshold efficiency, DTE, is a term created and employed by Quantum TC to refer to an efficiency used as a threshold of takt time for an operator incentive earnings based on production output. As takt time is a dynamic requirement this makes the threshold a dynamic level.

DTE is good to maintain a production quota payment system maintaining the just in time concept to avoid the waste of overproduction which is mostly to happen when operators are well motivated under a production volume based incentive.

DTE is calculated as followed:

1- obtain takt time from available time per day and average demand per day. For example if available time is 480 min a day and demand is 5000 per week, then takt is 480/1000 = 0.48 min o nearly 30 seconds and assuming a week of 5 days.

2- because takt time fluctuates with demand then it is recommended to obtain target cycle time which is a percentage below takt. This percentage is calculated from the coefficient of variation of takt which is the standard deviation of takt time for a predetermined period divided by the mean. Suppose takt mean is 40 seconds with a standard deviation of 5 seconds then coefficient of variation is 5/40 = 12.5%. Target cycle time at the takt of 30 seconds will be 30 seconds minus 12.5% = 26.25 seconds

3- any production volume incentive should be limited to target cycle time value and nothing more and should start at the same percentage above takt, that is 30+12.5% = 33.75 seconds, as this is the range of production rate from 33.75 seconds to 26.25 seconds that guarantees you'll meet customer demand over the period considered.

Therefore you may establish a policy to start paying production incentive at 5% minimum range, in this case it would be 33.75 minus 5% = 32.06 seconds.

4- DTE is then calculated 30/32.06 = 93.5%

This means that starting at 93.5% of takt or again 93.5% x 1000 units per day = 935 units. The incentive program could look something like:

A) 935 units per day: increase operator base pay by x amount or x percent

B) 970 units per day: increase operator base pay by x+x1 amount or percent

C) 1000 units per day: increase operator base pay by x2 amount or percent where x2 >x+c1

D) 1097 units per day which corresponds to the target of 26.25: increase pay by x3 with x3>x2.

You should not offer incentive over the volume that represents the full target cycle time, in our example over 1097 units per day. This would open doors to the waste of overproduction as well as defects and rework. The days you are over 1000 units will be compensated by the days you are below 1000 and as your takt fluctuates below and above 30 seconds then you are not

As takt time must be recalculated frequently because of demand fluctuation then target cycle time will be different every now and then and therefore DTE will be dynamic. But your volume based incentive will comply with just in time concepts. In addition operators must be induced on their very first day that the incentive program does not have a fixed value but a variable value based on customer demand for a fixed period of time which can be day, week, or month and that DTE or their incentive base (threshold) level will change very time period even though the policy of x1, x2 and x3 amount above base pay remains fixed. Just the threshold will change.

DTE is good to maintain a production quota payment system maintaining the just in time concept to avoid the waste of overproduction which is mostly to happen when operators are well motivated under a production volume based incentive.

DTE is calculated as followed:

1- obtain takt time from available time per day and average demand per day. For example if available time is 480 min a day and demand is 5000 per week, then takt is 480/1000 = 0.48 min o nearly 30 seconds and assuming a week of 5 days.

2- because takt time fluctuates with demand then it is recommended to obtain target cycle time which is a percentage below takt. This percentage is calculated from the coefficient of variation of takt which is the standard deviation of takt time for a predetermined period divided by the mean. Suppose takt mean is 40 seconds with a standard deviation of 5 seconds then coefficient of variation is 5/40 = 12.5%. Target cycle time at the takt of 30 seconds will be 30 seconds minus 12.5% = 26.25 seconds

3- any production volume incentive should be limited to target cycle time value and nothing more and should start at the same percentage above takt, that is 30+12.5% = 33.75 seconds, as this is the range of production rate from 33.75 seconds to 26.25 seconds that guarantees you'll meet customer demand over the period considered.

Therefore you may establish a policy to start paying production incentive at 5% minimum range, in this case it would be 33.75 minus 5% = 32.06 seconds.

4- DTE is then calculated 30/32.06 = 93.5%

This means that starting at 93.5% of takt or again 93.5% x 1000 units per day = 935 units. The incentive program could look something like:

A) 935 units per day: increase operator base pay by x amount or x percent

B) 970 units per day: increase operator base pay by x+x1 amount or percent

C) 1000 units per day: increase operator base pay by x2 amount or percent where x2 >x+c1

D) 1097 units per day which corresponds to the target of 26.25: increase pay by x3 with x3>x2.

You should not offer incentive over the volume that represents the full target cycle time, in our example over 1097 units per day. This would open doors to the waste of overproduction as well as defects and rework. The days you are over 1000 units will be compensated by the days you are below 1000 and as your takt fluctuates below and above 30 seconds then you are not

As takt time must be recalculated frequently because of demand fluctuation then target cycle time will be different every now and then and therefore DTE will be dynamic. But your volume based incentive will comply with just in time concepts. In addition operators must be induced on their very first day that the incentive program does not have a fixed value but a variable value based on customer demand for a fixed period of time which can be day, week, or month and that DTE or their incentive base (threshold) level will change very time period even though the policy of x1, x2 and x3 amount above base pay remains fixed. Just the threshold will change.