Question

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)	2340		2240		2125		2044

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	0.9		0.6		0.7		0.7
Process time per unit	2.3		2.2		2.1		2.0
Wait time per order before start of production	18.0		19.7		22.0		23.8
Queue time per unit	4.8		5.4		6.1		6.9
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.

Answer 1

SOLUTION

1A.

	Month 1	Month 2	Month 3	Month 4
Process time	2.3	2.2	2.1	2.0
Inspection time	0.9	1.1	1.1	0.9
Move time	0.9	0.6	0.7	0.7
Queue time	4.8	5.4	6.1	6.9
Total throughput time	8.9	9.3	10.0	10.5

1B.

	Month 1	Month 2	Month 3	Month 4
Wait time for order to start of production	18.0	19.7	22.0	23.8
Throughput time	8.9	9.3	10.0	10.5
Total delivery cycle time	26.9	29	32.0	34.3

1C.

	Month 1	Month 2	Month 3	Month 4
Process time (a)	2.3	2.2	2.1	2.0
Throughput time (b)	8.9	9.3	10.0	10.5
Manufacturing cycle efficiency (a/b)	25.85%	23.65%	21%	19.05%

2. All of the performances measures show unfavourable trends. For example, throughhput time per unit is increasing, manufacturing cycle efficiency is decreasing and delivery cycle time is increasing.

3A.

	Month 5
Process time	2.0
Inspection time	0.9
Move time	0.7
Queue time	0
Total throughput time	3.6

MCE = Process time / Throughput time

= 2.0/3.6 = 55.55%

3B.

	Month 5
Process time	2.0
Inspection time	0
Move time	0.7
Queue time	0
Total throughput time	2.7

MCE = Process time / Throughput time

= 2.0/2.7 = 74.08%