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

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