Question

In: Accounting

Carts Corporation is trying to determine how long it takes for one product to pass through...

Carts Corporation is trying to determine how long it takes for one product to pass through the production process. The following information was gathered regarding how many days the product spent in various production activities.

Activity Number of Days

Inspection 4

Storage 3

Assembly 5

Handling 2

Painting 3

Packaging 1

a. Which of the above activities are value-added? b. What is Carts’ total cycle time? c. Determine Carts’ manufacturing efficiency ratio. d. If Carts implements a total quality management program and a just-in-time inventory system, what would be the change in Carts’ manufacturing efficiency ratio?

Solutions

Expert Solution

Answer:

Carts Corporation:

A) Which of the above activities are value-added?

Meaning: Value added activities are those activities which increase the value of a a product on any particular stage of production or any other department.

For Example: For automobile industries , the value added activities shall be designing, assembling, painting etc.,

Now, as per the question the value added activities which can be identified as above shall be only assembly and painting , as without which the product cannot be completed.

-----------------------------------------------------------------------------------------------------------------------------

B) What is Carts’ total cycle time?

Cycle time can be calculated as the total time required for a product to be completed:

Calculation:

Activity Period (In days)
Inspection 4
Storage 3
Assembly 5
Handling 2
Painting 3
Packaging 1
Total Cycle time 18 days

Therefore, Carts’ total cycle time = 18 days

-----------------------------------------------------------------------------------------------------------------------------

C) Determine Carts’ manufacturing efficiency ratio:

Formula for manufacturing efficiency ratio = Value added time / Total Cycle Time

= ({Assembly days + Painting days} / Total cycle time

= { 5 + 3} days / 18 days

= 44.44% (or) 44%

-----------------------------------------------------------------------------------------------------------------------------

D) If Carts implements a total quality management program (TQM) and a just-in-time inventory system (JIT), what would be the change in Carts’ manufacturing efficiency ratio?

Now, TQM (Total quality management) aims at continuous reduction of errors in various stages of production, thereby reducing the need to implement quality checks and inspections,

Just in time (JIT) system follows the principle of production when required or demanded , and it is used by the companies to minimize the inventory holding costs, thereby also reducing the price of the product ultimately.

Now, JIT eliminates the storage activities required.

Total time will be reduced from = { 18 days - Inspection days (4) - Storage days (3) } = 11 days

Therefore: Carts’ manufacturing efficiency ratio can be changed as

Manufacturing efficiency ratio = Value added time / Total Cycle Time

= ({Assembly days + Painting days} / Total cycle time

= = { 5 + 3} days / (18 - 4 - 3) days

= 8 days / 11 days

= 72.73% or 73%

Upon implementation of JIT and TQM , the manufacturing efficiency ratio shall be increased from 44% to 73%.

-----------------------------------------------------------------------------------------------------


Related Solutions

The psychology department of Bahçeşehir University conducted an investigation to determine how long it takes for...
The psychology department of Bahçeşehir University conducted an investigation to determine how long it takes for a woman or man to get married after their graduation in Istanbul . Two independent random samples were selected and the following summary information concerning times to completion o f university were computed. Men Women Sample Size 100 85 Sample Mean 8.8 8.4 Population Variance 1 .96 2.25 a) State the appropriate null and alternative hypotheses to determine whether there is a significant difference...
Experiments are done to find out how long it takes rabbits to find their path through...
Experiments are done to find out how long it takes rabbits to find their path through a maze. Mean time u=18 seconds is completion time for a maze. A scientist suggests that carrots will cause the rabbits to complete the maze faster. Experiments are done on 4 rabbits with carrots as a stimulus and the time in seconds are recorded 15,15,16,17 1.State the ho and ha 2.assume that the distribution of times is normal, do these experiment results support the...
how long it takes for one gallon of tap water (40 F) in a container (...
how long it takes for one gallon of tap water (40 F) in a container ( fiberglass, metal, plastic) sitting in a room (72 F) to rise one degrees F? Thank you
1. What happens if one solute can pass through the membrane, but another cannot? 2. How...
1. What happens if one solute can pass through the membrane, but another cannot? 2. How do semi-permeable membranes and the processes of diffusion and osmosis contribute to homeostasis in cells?
Toyota company prides themselves on customer service. they have been trying to determine exactly how long...
Toyota company prides themselves on customer service. they have been trying to determine exactly how long it takes, from start to finish, to buy a car at their dealerships. they have determined that the two parts of the transaction (showroom and service) follow the normal model. showroom has a mean time of 3.5 hours with a standard deviation of 1.5 hours. service has an average time of 2 hours with a standard deviation of 0.5 hours. a) What is the...
How does one determine a mark-up on a product or service?
How does one determine a mark-up on a product or service?
A radio station trying to determine what kind of music to play takes a simple random...
A radio station trying to determine what kind of music to play takes a simple random sample of 50 students at each of three locations: a local middle school, a high school, and a college. The students are asked to choose which of three different music genres they most enjoy hearing on the radio. Here are the results: (12 points). Music Genre Hip-hop Alternative Post-rock Total Age Level Middle-school 28 18 4 50 High-School 22 22 6 50 College 16...
A study is to be conducted to see how long it takes for a taxpayer to...
A study is to be conducted to see how long it takes for a taxpayer to complete his income tax return. Assume that the time required to complete the return is normally distributed. A random sample of 17 taxpayers is taken whose mean (of the time in hours to complete the return) is 7.8 hours with a standard deviation of 2.3 hours. A) Determine the value of t B) Find the approximate error C) Find the interval with 95% confidence...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Second Quarter $220,000 110,000 110,000 22,000 $ 88,000 Third Fourth Quarter $190,000 95,000 95,000 19,000 S 76,000 Quarter Quarter $280,000 140,000 140,000 28,000 Total $920,000 460,000 460,000 92,000 Sales revenue Cost of goods sold Gross profit Selling administrative expenses $230,000 115,000 115,000 23,000 $ 92,000 Net income $112,000 $368,000 Historically, cost of...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue $ 90,000 $ 100,000 $ 105,000 $ 130,000 $ 425,000 Cost of goods sold 54,000 60,000 63,000 78,000 255,000 Gross profit 36,000 40,000 42,000 52,000 170,000 Selling & administrative expenses 8,500 10,000 10,500 13,000 42,000 Net income $ 27,500 $ 30,000 $...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT