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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 10 minutes to complete.

The final assembly for each stereo unit requires 18 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 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)			%

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.

b

Answer 1

1
	Value added Time:
	assembly	4
	Appliance Assembly	18
	Time to test one unit	8
	Packing and labeling	12
	Total	42
	Non- Value Added time:
	Wait time:
	Within batch wait time - assembly (50*4)	200
	Within batch wait time - final assembly(50*18)	900
	Within batch wait time - testing (50*8)	400
	Within batch wait time - shipping (50*12)	600
	assembly setup	10
	Total Wait Time (a)	2110
	Move Time:
	Move from assembly to final assembly	10
	Move from final assembly to testing	20
	Total Move Time (b)	30
	Total Non-Value Added item (a) + (b)	2140
	Total Lead time (42 + 2140)	2182
	Value added ratio (42 / 2182)	1.9%
2	Correct Answer is b.
	The move time in this process shall be reduced by changing the layout from process orientation to product orientation as a result move time and wait time would be eliminated under product orientation layout.