Question

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
	1		2		3		4
Throughput time (days)	?		?		?		?
Delivery cycle time (days)	?		?		?		?
Manufacturing cycle efficiency (MCE)	?		?		?		?
Percentage of on-time deliveries	79	%	75	%	72	%	69	%
Total sales (units)	2790		2671		2534		2438

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:

	Average per Month (in days)
	1		2		3		4
Move time per unit	0.9		0.6		0.7		0.7
Process time per unit	3.9		3.7		3.5		3.3
Wait time per order before start of production	24.0		26.3		29.0		31.4
Queue time per unit	4.8		5.4		6.1		6.9
Inspection time per unit	0.5		0.6		0.6		0.5

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 Months 1 2 3 4 10.1 10.3 10.9 11.4 days days days days Time 34.1 36.6 39.9 42.8 days days days days Manufacturing Cycle Efficiency 38.61% 35.929% 32.11% 28.95% *Calculations for 1 a, b, care shown below: Ans. 1 a Throughput time = Move time + Process time + Queue time + Inspection time Months Particulars 1 2 3 4 0.6 3.7 Move time per unit Process time per unit Inspection time per unit Queue time Total (Throughput Time) 0.9 3.9 0.5 4.8 0.6 5.4 0.7 3.5 0.6 6.1 10.9 days 0.7 3.3 0.5 6.9 11.4 days 10.1 days 10.3 days Ans. 1b Manufacturing cycle efficiency = Process time or value added time / Throughput time * 100 Months 1 3.9 / 10.1 * 100 38.61% 2 3.7 / 10.3 * 100 35.92% 3 3.5 / 10.9 * 100 32.11% 4 3.3/11.4 * 100 28.95% Ans. 1c Delivery cycle time = Throughput time + Wait time per order before start of production Months 1 2 3 4 10.1 + 24.0 10.3 + 26.3 10.9 +29.0 11.4 +31.4 34.1 36.6 39.9 42.8 days days days days Ans. 2 The Throughput time measure displays Delivery cycle time-days measure displays Manufacturing cycle efficiency - days measure displays Favorable Favorable Unfavorable trends trends 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 4.5 days 73.33% Month 6 4.0 days 82.50% *Calculations: Ans. 3 a Month 5: Throughput time: Move time per unit Process time per unit Inspection time per unit Total 0.7 3.3 0.5 4.5 days MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100 3.3 / 4.5 * 100 73.33% Ans. 3 b Month 6: Throughput time: Move time per unit Process time per unit Total 0.7 3.3 4.0 days MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100 3.3/4.0 * 100 82.50%