mpute the company\'s resi EXERCISE 12-3 of Internal Business Process Performance
ID: 2575897 • Letter: M
Question
mpute the company's resi EXERCISE 12-3 of Internal Business Process Performance [LO 12-3 Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount between when a customer places an order and when the order is shipped. For the first o operations during the current year the following data were reported: quarter of 0.3 days Wait time (from order to start of production) ..14.0 days 2.7 days 1.0 days 5.0 days Process time Move time Queue time . .. Required: . Compute the throughput time. 2. Compute the manufacturing cycle efficiency (MCE) for the quarter 3. What percentage of the throughput time was spent in non-value-added activities? 4. Compute the delivery cycle time. 5. If by using Lean Production new MCE? all queue time during production is eliminated, what will be theExplanation / Answer
Mittel Rhein Ag
Throughput time = process time + inspection time + move time + Queue time
= 2.7 days + 0.3 days + 1.0 days + 5.0 days = 9 days
Manufacturing cycle efficiency = value added time/throughput time
Value added time = time spent on working on the products or the process time
Value added time = 2.7 days
Manufacturing cycle efficiency = 2.7/9 = 30%
Percent of throughput time spent on value added activities = 30%
Percent of throughput time spent on non-value added activities = total throughput time – time spent on value added activities
Hence percent of throughput time spent on non-valued added activities = 100 – 30 = 70%
Delivery cycle time = wait time + throughput time
Throughput time = 9 days
Wait time = 14 days
Delivery cycle time = 14 + 9 = 23 days
When queue time is eliminated, the throughput time = 2.7 days + 0.3 days + 1.0 days = 4 days
Throughput time = 4 days
Manufacturing cycle efficiency = process time/throughput time
= 2.7/4 = 67.5%
Hence, elimination of queue time through Lean Production resulted in an increase in MCE from 30% to 67.5%.
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