Opportunity Cost of Down Machinery
Value unused machinery capacity without confusing opportunity cost, accounting cost and actual savings.
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A stop does not automatically create lost sales for its full duration. Effects depend on demand, stock, later recovery and whether the equipment truly constrains flow. Separate unrecovered contribution margin, incremental costs and existing accounting costs.
Measure time
Define equipment, period, planned time and states: running, setup, breakdown, confirmed waiting and outside schedule. Sampling can estimate shares but does not record every event or prove its cause. Complement with production and maintenance records.
Under independent simple sampling, n₀=ceiling(z²p₀(1−p₀)/e²). At two-sided 95%, p₀=0.5 and e=0.03, this gives 1,068. That is not the margin for every OEE factor: performance needs ideal cycle and counts, quality good/total units.
Explicit economic model
Incremental impact = unrecovered production hours × contribution margin per hour + additional non-overlapping costs + applicable penalties.
Define each term without overlap. Use contribution margin, not full revenue, when variable costs are avoided by not producing. Fixed payroll must not be added again as incremental cost if already included elsewhere. Accounting depreciation is not automatically avoidable cash.
Simulated example
Assume 1,200 genuinely unrecovered production hours at a non-duplicated €3,200/h contribution margin: €3,840,000. Add only incremental costs excluded from that margin: 800 person-hours at €45/person-hour gives €36,000, plus €150,000 confirmed penalties.
The conditional total is €4,026,000, about €4.03 million. If €45/h is a ten-person team's combined rate, do not multiply it again. If it is individual and 800 denotes elapsed hours for every team member, exposure changes. Units must be explicit.
If an 18% stop estimate corresponds to 1,200 hours, compatible exposure is about 6,667 machine-hours. Do not extrapolate to another calendar without justification.
From estimate to improvement
Prioritise confirmed causes, safety, feasibility, cost, risk and timing. Estimate benefits from process-specific data and assumptions. Hourly costs or stoppage reductions from another context are not an expected outcome or a savings promise for your facility.
Stop frequency does not diagnose vibration or component life. Competent maintenance assessment needs relevant measurements. Temporal association alone does not establish policy effects.
Validate the business case
Separate upfront investment and recurring expense. Payback needs net cash flows over time, not annual cost divided by gross benefit. Check demand for recovered output and bottleneck displacement.
Do not add opportunities for serial machines as if each generated the same extra margin independently. Assess quality, energy and safety separately rather than inferring them from OEE.
Tools
Worksamp supports state-distribution studies. It does not automatically prove root cause, ROI, savings or grant eligibility. Stopwatch study, event records and attendance data are different sources; reconcile their scopes and units.
Sources: NIST, OEE. See Worksamp and document assumptions before deciding.