ABC Mfg. is evaluating the desirability of implementing process improvements and
ID: 449119 • Letter: A
Question
ABC Mfg. 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:
Required Answers (explain the math used)
1. Determine the production (manufacturing) lead time for each of the two decision alternatives.
2. Determine the processing cycle efficiency (PCE) for each decision alternative.
3. Based on only the PCE figures calculated in requirement 2, should the company implement the proposed process improvements? Why or why not?
4. Why would process improvements, such as those referenced above, likely lead to improved financial results?
Process Activity Current Process After Process Improvements Wait Time 4 hours 1 hour Inspection 40 minutes 5 minutes Moving 80 minutes 20 minutes Processing (manufacturing) 2 hours 75 minutesExplanation / Answer
1. Determine the production (manufacturing) lead time for each of the two decision alternatives.
Answer: The production lead time for current process = 8 hours
The production lead time for improved process = 2 hours 40 minutes.
2. Determine the processing cycle efficiency (PCE) for each decision alternative.
Answer: PCE for current process = (Value-added Time / Cycle Time) = 4/8 = 50%
PCE for improved process = (Value-added Time / Cycle Time) = 5/3/8/3 = 5/8
3. Based on only the PCE figures calculated in requirement 2, should the company implement the proposed process improvements? Why or why not?
Answer: Process cycle effitiency has reduced drastically for the improved process. Therefore the improvement is not feasible.
4. Why would process improvements, such as those referenced above, likely lead to improved financial results?
Answer: The financial results would get stronger as the time get reduced per unit of manufacturing that reduces costs too making the operations more profitable.