Question

Lead Time

Sound Tek Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards. Each board requires 4 minutes of board assembly time. After each batch is completed, the operator moves the assembled boards to the final assembly area. This move takes 9 minutes to complete.

The final assembly for each stereo unit requires 19 minutes and is also done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 50-unit batch is tested one at a time. Each test requires 8 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 11 minutes per unit.

1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 50 units. Categorize the non-value-added time into wait and move time. Round the percentage to one decimal place.

Value-added lead time			min.
Non-value-added lead time:
	Wait time lead time	min.
	Move time lead time	min.
Total non-value-added lead time			min.
Total lead time			min.
Value-added ratio (as a percent)			%

2. Move time in this process could best be reduced by:

a. Doing nothing.

b. Changing the layout from a process orientation to a product orientation.

c. Increasing batch sizes.

d. Eliminating the testing step.

e. Hiring more workers.

Answer 1

Manufacturing Process	Time Taken
Printed Circuit Board Assembly	200	(50*4)
Moving Time to Final Assembly	9
Final Assembly	950	(50*19)
Moving Time to Testing	20
Testing	400	(50*8)
Setup Time	30
Shipping	550	(11*50)
Total Time Taken	2,159.00
Value Added Time
Printed Circuit Board Assembly	200
Final Assembly	950
Shipping	550
Total Value Added Time	1,700
Value Added Ratio	0.79	(1700/2159)
Non Value Added Time
Moving Time to Final Assembly	9	Move Time
Moving Time to Testing	20
Testing	400	Wait time
Setup Time	30
Total Non Value Added Time	459
Non Value Added Ratio	0.21	(459/2159)

2.

If Move time is to be reduced in cost effective manner, then its better to increase the batch size so average move time per batch will get reduced, further it can also be reduced by hiring more workers.