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.

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	92	%	87	%	84	%	81	%
Total sales (units)	2060		1972		1871		1800

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	0.7		0.4		0.5		0.5
Process time per unit	3.0		2.8		2.7		2.5
Wait time per order before start of production	23.0		25.2		28.0		30.3
Queue time per unit	4.2		4.7		5.3		6.0
Inspection time per unit	0.9		1.1		1.1		0.9

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.

Explanation

1.

a, b,  and c.

	Month
	1		2		3		4
Throughput time—days:
Process time (x)	3.0		2.8		2.7		2.5
Inspection time	0.9		1.1		1.1		0.9
Move time	0.7		0.4		0.5		0.5
Queue time	4.2		4.7		5.3		6.0
Total throughput time (y)	8.8		9.0		9.6		9.9
Delivery cycle time—days:
Wait time from order to start of production	23.0		25.2		28.0		30.3
Throughput time	8.8		9.0		9.6		9.9
Total delivery cycle time	31.8		34.2		37.6		40.2
Manufacturing cycle efficiency (MCE):
Process time (a)	3.0		2.8		2.7		2.5
Throughout time (b)	8.8		9.0		9.6		9.9
MCE (a) ÷ (b)	34.1	%	31.1	%	28.1	%	25.3	%

2.

All of the performance measures display unfavorable trends. Throughput time per unit is increasing—largely because of an increase in queue time. Manufacturing cycle efficiency is declining and delivery cycle time is increasing. In addition, the percentage of on-time deliveries has dropped.

3-a. & 3-b.

	Month
	5		6
Throughput time—days:
Process time (x)	2.5		2.5
Inspection time	0.9		0.0
Move time	0.5		0.5
Queue time	0.0		0.0
Total throughput time (y)	3.9		3.0
Manufacturing cycle efficiency (MCE):
Process time (x) ÷ Throughput time (y)	64.1	%	83.3	%

As a company reduces non-value-added activities, the manufacturing cycle efficiency increases rapidly. The goal, of course, is to have an efficiency of 100%. This will be achieved when all non-value-added activities have been eliminated and process time is equal to throughput time.

Thanks