Question

Lead Time

Sound Tek Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards. Each board requires 4 minutes of board assembly time. After each batch is completed, the operator moves the assembled boards to the final assembly area. This move takes 11 minutes to complete.

The final assembly for each stereo unit requires 22 minutes and is also done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 50-unit batch is tested one at a time. Each test requires 9 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 9 minutes per unit.

1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 50 units. Categorize the non-value-added time into wait and move time. Round the percentage to one decimal place.

Value-added lead time			min.
Non-value-added lead time:
	Wait time lead time	min.
	Move time lead time	min.
Total non-value-added lead time			min.
Total lead time			min.
Value-added ratio (as a percent)			%

2. Move time in this process could best be reduced by:

a. Doing nothing.

b. Changing the layout from a process orientation to a product orientation.

c. Increasing batch sizes.

d. Eliminating the testing step.

e. Hiring more workers.

Answer 1

1.Computation of value added lead time, non value added lead time and value added ratio is shown below:

Details Value added minutes (a) Non-value added lead minutes Wait time lead minutes Move time lead minutes Total non-value added items (b) Total lead time(c)=(a)+(b) Value added ratio (a)/(c) Minutes Minutes 44 2,186 31 2,217 2,261 1.95%

Working notes:

(1).Computation of value-added minutes is shown below:

Details PC board assembly Final assembly Testing Packaging and labelling Total Value added time Minutes 4 22 9 9 44

(2).Computation of wait time for non-value added minutes is shown below:

Details Minutes Wait time for non-added value (44 minutes*(50-1) batches) Add: test set up time Wait time minutes 2,156 30 2,186

Wait time= Total Time to Perform the Operations x (Batch Size – 1)

3.Move lead time minutes:

From assembly board to final assembly=11 minutes

Move to test building=20 minutes

Thus move time minutes=11 minutes+20 minutes=31 minutes

2.b.The move lead time could be reduced by changing the layout from process orientation to product orientation. A product oriented layout reduces the set up time and thus it has a shorter lead time whereas the process oriented is focused on process rather than on the product ,thus the longer the process , longer would be the lead time, so product oriented layout should be used to reduce the lead time.