Question

Problem 11-19 Internal Business Process Performance Measures (LO11-3] Tombro Industries is in the process of automating one of its plants and developing a flexible manufacturing system. The company is finding it necessary to make many changes in operating procedures. Progress has been slow, particularly in trying to develop new performance measures for the factory. In an effort to evaluate performance and determine where improvements can be made, management has gathered the following data relating to activities over the last four months: Month 1 2 144 205 66 183 59 116 50 98 47 78 122 99 10 days 9 days 1% 7 days 28 5 days 38 Quality control measures: Number of defects Number of warranty claims Number of customer complaints Material control measures : Purchase order lead time Scrap as a percent of total cost Machine performance measures: Machine downtime as a percentage of availability Use as a percentage of availability Setup time (hours) Delivery performance measures: Throughput time Manufacturing cycle efficiency (MCE) Delivery cycle time Percentage of on-time deliveries dp op ? NW Wom ? 95% 89% The president has read in industry journals that throughput time, MCE, and delivery cycle time are important measures of performance, but no one is sure how they are computed. You have been asked to assist the company, and you have gathered the following data relating to these measures:

Answer 1

Ans.		Throughput Time		Delivery Cycle		Manufacturing Cycle
	Months			Time		Efficiency
	1	9	days	17	days	40.0%
	2	9.8	days	20	days	27.55%
	3	11	days	22	days	21.82%
	4	12	days	25	days	10.00%
	*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	0.2	0.6	0.6	0.7
	Process time per unit	3.6	2.7	2.4	1.2
	Inspection time per unit	0.9	0.7	0.7	0.7
	Queue time	4.3	5.8	7.3	9.4
	Total (Throughput Time)	9 days	9.8 days	11 days	12 days
Ans. 1 b	Manufacturing cycle efficiency = Process time or value added time / Throughput time * 100
	Months
	1	3.6 / 9 * 100	40.0%
	2	2.7 / 9.8 * 100	27.55%
	3	2.4 / 11 * 100	21.82%
	4	1.2 / 12 * 100	10.00%
Ans. 1 c	Delivery cycle time = Throughput time + Wait time per order before start of production
	Months
	1	9 + 8	17	days
	2	9.8 + 10.2	20	days
	3	11 + 11	22	days
	4	12 + 13	25	days
Ans. 3		Month 5	Month 6
	Throughput time	2.6 days	1.9 days
	Manufacturing cycle efficiency (MCE)	46.15%	63.16%
	*Calculations:
Ans. 3 a	Month 5 :
	Throughput time:
	Move time per unit	0.7
	Process time per unit	1.2
	Inspection time per unit	0.7
	Total	2.6	days
	MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100
		1.2 / 2.6 * 100
		46.15%
Ans. 3 b	Month 6 :
	Throughput time:
	Move time per unit	0.7
	Process time per unit	1.2
	Total	1.9	days
	MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100
		1.2 / 1.9 * 100
		63.16%