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:

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	0.4	days
Wait time (from order to start of production)	16.9	days
Process time	2.8	days
Move time	1.4	days
Queue time	3.9	days

Required:

1. Compute the throughput time. (Round your answer to 1 decimal place.)

2. Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your percentage answer to nearest whole percent.)

3. What percentage of the throughput time was spent in non–value-added activities? (Round your percentage answer to nearest whole percent.)

4. Compute the delivery cycle time. (Round your intermediate calculations and final answer to 1 decimal place.)

5. If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place.)

 

Explanation

1.

Throughput time	= Process time + Inspection time + Move time + Queue time
	= 2.8 days + 0.4 days + 1.4 days + 3.9 days
	= 8.5 days

2.

Only process time is value-added time; therefore the manufacturing cycle efficiency (MCE) is:

MCE =	Value-added time	=	2.8 days	= 0.33
	Throughput time		8.5 days

3.

If the MCE is 33%, then 33% of the throughput time was spent in value-added activities. Consequently, the other 67% of the throughput time was spent in non-value-added activities.

4.

Delivery cycle time	= Wait time + Throughput time
	= 16.9 days + 8.5 days
	= 25.4 days

5.

If all queue time is eliminated, then the throughput time drops to only 4.6 days (0.4 + 2.8 + 1.4). The MCE becomes:

MCE =	Value-added time	=	2.8 days	= 0.609
	Throughput time		4.6 days

Thus, the MCE increases to 60.9%. This exercise shows quite dramatically how lean production can improve the efficiency of operations and reduce throughput time.

Thanks