Williams Optical Inc. is considering a new just-in-time product cell. The presen

Question

Williams Optical Inc. is considering a new just-in-time product cell. The present manufacturing approach produces a product in four separate steps. The production batch sizes are 40 units. The process time for each step is as follows: The time required to move each batch between steps is 8 minutes. In addition, the time to move raw materials to Process Step 1 is also 8 minutes, and the time to move completed units from Process Step 4 to finished goods inventory is 8 minutes. The new just-in-time layout will allow the company to reduce the batch sizes from 40 units to 5 units. The time required to move each batch between steps and the inventory locations will be reduced to 2 minutes. The processing time in each step will stay the same. Determine the value-added, non-value-added, total lead times, and the value-added ratio under the present and proposed production approaches. If required, round percentages to one decimal place. Present Approach Proposed Approach Value-added time 30 min 30 min Non-value-added time 120 min 120 min Total lead time 122 min 122 min Value-added ratio (as a percent) 24.6 % 24.6 %

Explanation / Answer

Solution.

Calculation of lead time.

Production Lead Time = The time it takes to physically make or deliver the thing from the receipt of production authorization to customer delivery.

Value-added total lead times = Step 1 to Step 2 = 8 minute + Step 2 to Step 3 = 8 minute + Step 2 to Step 3 = 8 minute = 24 Minute.

Non-value-added total lead times = Raw material to step 1 = 8 minute + Step 4 to Finished goods = 8 minute = 16 Minute.

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