Question

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		3		4
Quality control measures:
Number of defects	185		163		124		91
Number of warranty claims	46		39		30		27
Number of customer complaints	102		96		79		58
Material control measures:
Purchase order lead time	8 days		7 days		5 days		4 days
Scrap as a percent of total cost	1	%	1	%	2	%	3	%
Machine performance measures:
Machine downtime as a percentage of availability	3	%	4	%	4	%	6	%
Use as a percentage of availability	95	%	92	%	89	%	85	%
Setup time (hours)	8		10		11		12
Delivery performance measures:
Throughput time	?		?		?		?
Manufacturing cycle efficiency (MCE)	?		?		?		?
Delivery cycle time	?		?		?		?
Percentage of on-time deliveries	96	%	95	%	92	%	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:

	Average per Month (in days)
	1	2	3	4
Wait time per order before start of production	9.0	11.5	12.0	14.0
Inspection time per unit	0.8	0.7	0.7	0.7
Process time per unit	2.1	2.0	1.9	1.8
Queue time per unit	2.8	4.4	6.0	7.0
Move time per unit	0.3	0.4	0.4	0.5

Required:

1-a. Compute the throughput time for each month.

1-b. Compute the manufacturing cycle efficiency (MCE) for each month.

1-c. Compute the delivery cycle time for each month.

3-a. Refer to the inspection time, process time, and so forth, given for month 4. Assume that in month 5 the inspection time, process time, and so forth, are the same as for month 4, except that the company is able to completely eliminate the queue time during production using Lean Production. Compute the new throughput time and MCE.

3-b. Refer to the inspection time, process time, and so forth, given for month 4. Assume that in month 6 the inspection time, process time, and so forth, are the same as in month 4, except that the company is able to eliminate both the queue time during production and the inspection time using Lean Production. Compute the new throughput time and MCE.

Answer 1

Ans.		Throughput Time		Manufacturing	Delivery Cycle
	Months			Cycle Efficiency	Time
	1	6	days	35.0%	15	days
	2	7.5	days	26.67%	19	days
	3	9	days	21.11%	21	days
	4	10	days	18.00%	24	days
	*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	0.3	0.4	0.4	0.5
	Process time per unit	2.1	2	1.9	1.8
	Inspection time per unit	0.8	0.7	0.7	0.7
	Queue time	2.8	4.4	6	7
	Total (Throughput Time)	6 days	7.5 days	9 days	10 days
Ans. 1 b	Manufacturing cycle efficiency = Process time or value added time / Throughput time * 100
	Months
	1	2.1 / 6 *100	35.0%
	2	2 / 7.5 *100	26.67%
	3	1.9 / 9 * 100	21.11%
	4	1.8 / 10 * 100	18.00%
Ans. 1 c	Delivery cycle time = Throughput time + Wait time per order before start of production
	Months
	1	9 + 6	15	days
	2	11.5 + 7.5	19	days
	3	12 + 9	21	days
	4	14 + 10	24	days
Ans. 3		Month 5	Month 6
	Throughput time	3 days	2.3 days
	Manufacturing cycle efficiency (MCE)	60.00%	78.26%
	*Calculations:
Ans. 3 a	Month 5 :
	Throughput time:
	Move time per unit	0.5
	Process time per unit	1.8
	Inspection time per unit	0.7
	Total	3	days
	MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100
		1.8 / 3 * 100
		60.00%
Ans. 3 b	Month 6 :
	Throughput time:
	Move time per unit	0.5
	Process time per unit	1.8
	Total	2.3	days
	MCE (manufacturing cycle efficiency) = Process time / Throughput time * 100
		1.8 / 2.3 * 100
		78.26%