Resource (Work Centre) Efficiency percentage in Dynamics AX

There’s a field on the Resource (Work centre) in Dynamics AX called the ‘Efficiency percentage’.

I must admit I’ve never paid it too much mind. It’s a useful little setting because it’s easy to adjust (because it’s held on the resource and not on the route operation).

Usually in a workshop I just make a throw-away comment like “Set this to say 95% so that you get an achievable schedule”. But this time someone was awake in the workshop and we started to discuss this concept in detail.

Here’s how it works. Let say that my machine in the example above has a plate on the side that says “this machine makes 15 widgets per hour” – and let’s say, for the sake of argument that it runs 24 hours per day. Now my machine only makes 15 widgets per hour when it is running – but I can expect the odd problem, so I’ll set my old friend Efficiency percentage to 95%. Therefore, my setup looks a like this:

Now 15 x 24 = 360. Let’s create and schedule a production order for 360:

My production order is scheduled to start at midnight and finish at 1:15am the following day:

And the capacity reservations are:

So because of my 95% Efficiency percentage I’m only getting 22.80 hours of useful work in my 24-hour day. Another way of looking at this is although my machine is theoretically capable of producing 360 widgets in a 24-hour day, actually in a normal working 24-hour period I’m only expecting to produce 342 (360 x 95%). I’ll just check my maths by changing the production order and re-scheduling it:

Now that’s all perfectly sensible, but the debate was started by the question: “So what’s the standard cost of 1 widget?”. Our machine is powered by huge amounts of unobtainium, and costs $150.00 per hour to run. Is the standard cost of 1 widget $10.00 or $10.53 (24 x 150 / 342)?

I’m not sure I know the answer – it’s a bit of a value judgement. Interestingly, if you look at the way the production order cost is calculated (I’ve estimated my production order) you can see that the system only costs the calculated working time of the machine, and not the total elapsed time that is scheduled:

So if you may want to increase the hourly rate of a machine with an Efficiency percentage of less than 100% according to the additional [non-working] time that’s scheduled onto a production order. Unfortunately, if you do that you lose the advantage of the Efficiency percentage setting percentage which is that it can be adjusted simply and quickly – because if you change it, you’ll have to go and adjust your machine rates.