Question

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.
Problem 10-14 Measures of Internal Business Process Performance (LO10-3] DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations. Month Throughput time (days) Delivery cycle time (days) Manufacturing cycle efficiency (MCE) Percentage of on-time deliveries Total sales (units) 90% 2410 84% 2307 81% 2189 78% 2106 Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months: 3 Average per Month (in days) 1 4 0.9 0.5 0.6 0.6 3.6 3.2 3.0 18.0 19.7 23.0 24.8 4.7 5.5 - 6.4 7.4 0.6 0.8 0.8 0.6 26 Move time per unit Process time per unit Wait time per order before start of production Queue time per unit Inspection time per unit 3.4 Required: 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each month. 1-c. Compute the manufacturing cycle efficiency (MCE) for each month. 2. Evaluate the company's performance over the last four months. 3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. 3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

Answer 1

Ans.		Throughput Time	Delivery Cycle	Manufacturing Cycle
	Months			Time		Efficiency
	1	9.8	days	27.8	days	36.73%
	2	10.2	days	29.9	days	33.33%
	3	11	days	34	days	29.09%
	4	11.6	days	36.4	days	25.86%
	*Calculations for 1 a, b, c are shown below:
Ans. 1 a	Throughput time = Move time + Process time + Queue time + Inspection time
		Months
	Particulars	1	2	3	4
	Move time per unit	0.9	0.5	0.6	0.6
	Process time per unit	3.6	3.4	3.2	3
	Inspection time per unit	0.6	0.8	0.8	0.6
	Queue time	4.7	5.5	6.4	7.4
	Total (Throughput Time)	9.8 days	10.2 days	11 days	11.6 days
Ans. 1 b	Manufacturing cycle efficiency = Process time or value added time / Throughput time * 100
	Months
	1	3.6 / 9.8 * 100	36.73%
	2	3.4 / 10.2 * 100	33.33%
	3	3.2 / 11 * 100	29.09%
	4	3 / 11.6 * 100	25.86%
Ans. 1 c	Delivery cycle time = Throughput time + Wait time per order before start of production
	Months
	1	9.8 + 18	27.8	days
	2	10.2 + 19.7	29.9	days
	3	11 + 23	34	days
	4	11.6 + 24.8	36.4	days
Ans. 2	The Throughput time measure displays	Favorable	trends
	Delivery cycle time - days measure displays	Favorable	trends
	Manufacturing cycle efficiency - days measure displays	Unfavorable	trends
	*Throughput time and delivery cylce time are increasing every month, so these are favorable trends and
	Manufacturing cycle efficiency is an unfavorable trend as it is decreasing every month.

Ans. 3 Throughput time Manufacturing cycle efficiency (MCE) Month 5 4.2 days 71.43% Month 6 3.6 days 83.33% Ans. 3 a *Calculations: Month 5: Throughput time: Move time per unit Process time per unit Inspection time per unit Total 0.6 0.6 4.2 days MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100 3 / 4.2 * 100 71.43% Ans. 3 b Month 6: Throughput time: Move time per unit Process time per unit Total 0.6 3 3.6 days MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100 3/3.6* 100 83.33%