Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount

Question

Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported:

Required:

1.Compute the throughput time. (Round your answer to 1 decimal place.)

2. Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your percentage answer to nearest whole percent.)

3. What percentage of the throughput time was spent in non–value-added activities? (Round your percentage answer to nearest whole percent.)

4. Compute the delivery cycle time. (Round your intermediate calculations and final answer to 1 decimal place.)

5. If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Do not round intermediate calculations. Round your percentage answer to nearest whole percent.)

Inspection time 0.6 day Wait time (from order tostart of production) 17.0 days Process time 2.6 days Move time 0.5 day Queue time 3.7 days

Explanation / Answer

SOLUTION

1. Throughput time = Process time + Inspection time + Move time + Queue time

= 2.6 days + 0.6 days + 0.5 days + 3.7 days

= 7.4 days

2. Manufacturing cycle efficiency = Value-added time / Throughput time

= 2.6 days / 7.4 days

= 35%

3. The percentage is 65% because the MCE is 35%, then 35% of the throughput time was spent in value-added activities.

4. Delivery cycle time = Wait time + Throughput time

= 17 days + 7.4 days

= 24.4 days

5. MCE = Value-added time / Throughput time

= 2.6 days / 3.7 days

= 70%

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