ABC Mtg is evaluating the desirability of implementing process improvements and
ID: 2519839 • Letter: A
Question
ABC Mtg is evaluating the desirability of implementing process improvements and is seeking your help in determining whether it should proceed with the proposed improvements. One area of focus is how the improvements will affect processing time (cycle-time efficiency). Estimated activities and associated times for these activities under both the current process and after process improvements are as follows Process Activity Wait time Inspection Moving Processing (manufacturing) 4 hours 40 minutes 80 minutes 2 hours 1 hour 5 minutes 20 minutes 75 minutes Required: 1. Determine the production (manufacturing) lead time for each of the two decision alternatives Current process After process improvements minutes minutes eleimane theparcess oycle eftiency (PCEor ah dacsion altermative Round your answere to 2 decimal places.) ffic Current process Ater process improvernents References eBook & Resources Worksheet Obiective 17-01 Discuss e O Type here to searchExplanation / Answer
Solution:
Throughput Time / Manufacturing Cycle Time
Throughput time is the amount of time required for a product to pass through a manufacturing process, thereby being converted from raw materials into finished goods. Throughput time includes following times:
- Processing time --- it is the time taken to process/make the product (Conversion time from raw material to finished goods)
- Inspection Time – Time taken for inspecting the raw material, WIP and finished product.
- Move time – time required to move products into and outside of the manufacturing unit.
- Queue time – time spent waiting prior to the processing, inspection and move activities.
Throughput Time = Process time + Inspection time + Move time + Queue time
Part 1 --- Production Lead Time
Current Process = 2*60 Minutes + 40 Minutes + 80 Minutes + 0 = 240 Minutes
After process improvements = 75 + 20 + 5 = 100 Minutes
Note – It is assumed that wait time given if the length of time from the receipt of customer order to the start of production, hence not considered. If it is treated as Queue time then it is considered in calculating the Production Lead Time.
Part 2 – Process Cycle Efficiency
Manufacturing Cycle Efficiency
It measures the proportion of production time spent on value added activities.
The process time in the throughput time calculation is considered value added time, since this is the only step that actually produces the product.
The rest time is administrative and logistical non value added time.
Manufacturing Cycle Efficiency = Total Value Added Time / Total Throughput Time x 100
In the given question,
Total Value Added Time
Current Process = Processing time = 2*60 = 120 Minute
After process improvements = 75 Minutes
Total Time
Current Process = Wait Time 240 Minute + 40 + 80 + 120 Minutes = 480 Minutes
After process improvements = 60 + 5 + 20 +75 = 160 Minutes
Process Cycle Efficiency (PCE)
Current Process = Value Added Time 120 / Total Time 480 x 100 = 25%
After process improvements = Value added time 75 / Total Time 160 x 100 = 46.88%
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