Question

Can management of a company such as Apple use cycle time and cycle efficiency as useful measures of performance? Explain.

Answer 1

Cycle Efficiency is a ratio that measures the effectiveness and productivity of the production process by comparing the value added time with the total production time. In other words, it’s a calculation that cost accountants use to measure how efficiently products are being produced.

Cycle time and cycle efficiency are the measures which are used to evaluate the performance of the company on the basis of time and cost. Cycle time is the time which includes the process, inspection, and move and waiting time that incurred in manufacturing the products. And the cycle efficiency is ration of value added time processing time to total manufacturing cycle time. Company like Research in Motion (RIM) are based on production of product which need to consider the cycle time in order minimize cost and maximize profit as well as cover market share.

Cycle time play a very important role in planning and controlling activities in any industries. The following are some illustrative uses of cycle time:

Productivity measurement and control

Incentive payments

Inventory planning

Process design