Question

EXERCISE 11–3 Measures of Internal Business Process Performance [LO11–3] Guided Example 11-3 Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported:

Inspection time . . . . . . . . . Wait time (from order to start of production) ........ Process time .... Move time ...... Queue time ......... 0.3 days 14.0 days 2.7 days 1.0 days 5.0 days

Compute the throughput time.

Compute the manufacturing cycle efficiency (MCE) for the quarter.

What percentage of the throughput time was spent in non–value-added activities?

Compute the delivery cycle time.

If by using Lean Production all queue time during production is eliminated, what will be the new MCE?

Answer 1

1
Inspection time	0.3
Process time	2.7
Move time	1.0
Queue time	5.0
Throughput time	9.0	days
2
Process time	2.7
Divide by Throughput time	9.0
Manufacturing cycle efficiency (MCE)	30%
3
Non-value-added throughput time	70%	=1-30%
4
Throughput time	9.0
Wait time	14.0
Delivery cycle time	23.0	days
5
New Manufacturing cycle efficiency	67.5%	=2.7/(0.3+2.7+1)