Question

Problem 11-14 Measures of Internal Business Process Performance [LO11-3]

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	75	%	70	%	67	%	64	%
Total sales (units)	2770		2651		2515		2420

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	0.8		0.4		0.5		0.5
Process time per unit	3.9		3.7		3.5		3.3
Wait time per order before start of production	16.0		17.5		21.0		22.6
Queue time per unit	5.0		5.9		6.9		8.0
Inspection time per unit	0.4		0.6		0.6		0.4

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.

Answer 1

1) a)
Month	1	2	3	4
Throughput time in days:
Process time	3.9	3.7	3.5	3.3
Inspection time	0.4	0.6	0.6	0.4
Move time	0.8	0.4	0.5	0.5
Queue time during production	5	5.9	6.9	8
Total throughput time	10.1	10.6	11.5	12.2
b)
Manufacturing cycle efficiency (MCE): Process time ÷ Throughput time
Process time	3.9	3.7	3.5	3.3
Total throughput time	10.1	10.6	11.5	12.2	days
MAnufacturing cycle efficiency (MCE): Process time ÷ Throughput time	38.6%	34.9%	30.4%	27.0%
c)
Delivery cycle time in days:
Wait time to start of production	16	17.5	21	22.6
Throughput time	10.1	10.6	11.5	12.2	days
Total delivery cycle time	26.1	28.1	32.5	34.8
3)
a.
	Month 5th
Throughput time in days:
Process time	3.3
Inspection time	0.4
Move time	0.5
Queue time during production	0
Total throughput time	4.2	days
Manufacturing cycle efficiency (MCE): Process time ÷ Throughput time	78.57%
b)
	Month 6 th
Throughput time in days:
Process time	3.3
Inspection time	0
Move time	0.5
Queue time during production	0
Total throughput time	3.8	days
Manufacturing cycle efficiency (MCE): Process time ÷ Throughput time	86.84%

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 as has the total throughput.

Throughput time (days) 5 Delivery cycle time (days 6 Manufacturing cycle efficiency (MCE) 7 Percentage of on-time deliveries 8 Total sales (units) 0.75 2770 0.7 2651 0.67 2515 0.64 2420 10 Management has asked for your help in computing throughput time,deliver Average per Month (in da 12 3 Move time per unit 14 Process time per unit 5 Wai time per order before start of production 16 Queue time per unit 17 Inspection time per unit 18 19 20 1) a) 21 Month 22 Throughput time in days: 23 Process time 24 Inspection time 25 Move time 26 Queue time during production 27 Total throughput time 28 b) 0.8 3.9 16 0.4 3.7 17.5 5.9 0.6 0.5 3.5 21 6.9 0.6 0.5 3.3 2.6 0.4 0.4 -C14 -C17 -B14 B17 B13 -B16 SUM(823:B26) -D14 -D17 -D13 -D16 SUM(D23:D26) -E14 -E17 E13 -E16 SUM(E23:E26) SUM(C23:C26) 29 Manufacturing cycle efficiency (MCE): Process time +Throughput time 30 Process time 31 Total throughput time -B23 B27 -C27 D27 E27 32 MAnufacturing cycle efficiency (MCE): Process time+Throughput timeB30/831 C30/C31 D30/D31 E30/E31

34 c) 35 Delivery cycle time in days 36 Wait time to start of production 37 Throughput time 38 Total delivery cycle time 39 40 3) 41 a 42 43 44 Throughput time in days 45 Process time 46 Inspection time 47 Move time 48 Queue time during production 49 Total throughput time -B15 -B27 -B36+B37 -C27 -C36+C37 D15 -D27 -D36+D37 -E15 -E27 -E36+E37 Month 5th -E23 -E24 -E25 0 SUM(B45:B48) days 50 Manufacturing cycle efficiency (MCE): Process time 51 52 b) 53 54 Throughput time in days: 55 Process time 56 Inspection time 57 Move time 58 Queue time during production 59 Total throughput time Throughput time B45/B49 Month 6 th -B45 -E35 -B47 0 -SUM(B55:B58) days 60 Manufacturing cycle efficiency (MCE: Process time Throughput time B55/B59