Question
In: Accounting
Performance Measurement – MCE – Chapter 11 Management of the Linden Co. has kept track of...
- Performance Measurement – MCE – Chapter 11
Management of the Linden Co. has kept track of the process time to complete an order. The following average times for the most recent month.
Days
Wait time 7.4
Inspection time .6
Process time 2.1
Move time .7
Queue time 3.5
Compute the following:
- Delivery cycle time
- Throughput time
- Manufacturing cycle efficiency
- What percentage of time is spent on non-value-added activities?
Solutions
Expert Solution
1. Calculation of Delivery cycle time:
Delivery Cycle Time = Wait Time + Throughput Time
= 7.4 + 6.9
= 14.3 Days
2. Calculation of Throughput Time:
Throughput Time = Process Time + Inspection Time + Move Time + Queue Time
= 2.1 + 0.6 + 0.7 + 3.5
= 6.9 Days
3. Calculation of Manufacturing Cycle Efficiency :
Manufacturing Cycle Efficiency = (Value-Added Time / Throughput Time ) * 100
= (2.1 / 6.9)*100
= 30.435 % (Rounded off)
Note:Process time is a Value-Added Time
4. Calculation of Percentage of time is spent on non-value-added activities :
Non-Value-Added Time = Wait Time + Inspection Time + Move Time + Queue Time
= 7.4 + 0.6 + 0.7 + 3.5
= 12.2 Days
Percentage of time is spent on non-value-added activities = ( Time spend on Non-Value-Added activities / Total time ) * 100
= ( 12.2 / 14.3 ) * 100
= 85.315% (rounded off )
Total Time = Value Added Time + Non Value Added Time
= 2.1 + 12.2
= 14.3 Days
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