A textile manufacturing company has just taken an order for linen material. They

Question

A textile manufacturing company has just taken an order for linen material. They have been asked what the lead time will be (delivery date). Before answering they evaluated the current situation and gathered the following information. WIP=500 yards Scheduled Orders (backlog)=300 yards Mean work rate=25 yards per day Std dev of work rate=5 yards per day If they want to attain a service level of 90%, what is the minimum length of time they should quote for the lead time? What actions could be taken if the due date was not acceptable to the customer?

Explanation / Answer

The average daily production = 25 yards

Standard deviation of production = 5 Yards

90% confidence limit = Mean - 1.645*SD, Mean+1.645*SD

= 25- 1.645*5, 25+1.645*5

= 25-8.225, 25+8.225

=16.775, 33.225

This is daily production range

So In order to produce 300 units, the time required =

= 300/16.775, 300/33.225

= 17.88 ,9.025

In order to produce 300 units the firms requires a minimum time of 9.025 days and a maximum time of 17.88 days in 90% confidence limits

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