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 21 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 7 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 12 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)			%

Answer 1

Answer:
Value -added lead time (A)		44 min
Non-value-added Lead time :
Wait time lead time	2,186 min
Move time lead time	29 min
Total Non-value-added Lead time		2,215 min
Total Lead Time (B)		2,259 min
Value -added Ratio ( 44 / 2,259 ) min		1.9 %

Workings:
Particulars	min.
Board Assembly time	4 min
Add:   Final Assembly time	21 min.
Add: Testing time	7 min
Add: Packing and Labelling time	12 min
Value added lead time	44 min
Non-value-added Wait Time    = Test Setup Time + (Batch Size – 1) x Value added lead time    =     30 min + (50 - 1 ) x 44    =     30 min + 2,156 min =       2,186 min
Move time lead time           = Move time to Final Assembly Area + Move time to Testing           = 9 min + 20 min           = 29 min