PROBLEM 11-19 Internal Business Process Performance Measures (L011-3] Tombro Industries is in the process of automating one of its plants and developing a flexible man- ufacturing system. The company is finding it necessary to make many changes in operating pro- cedures. Progress has been slow, particularly in trying to develop new performance measures for the factory. In an effort to evaluate performance and determine where improvements can be made, man agement has gathered the following data relating to activities over the last four months: 1 Month 2 3 4 163 124 185 46 102 27 96 8 days 1% 7 days 1% 5 days 2% 4 days 3% Quality control measures: Number of defects .... .......... Number of warranty claims ....... Number of customer complaints ........ Material control measures: Purchase order lead time .......... Scrap as a percent of total cost .. Machine performance measures: Machine downtime as a percentage of availability.. Use as a percentage of availability .............. Setup time (hours) ..... Delivery performance measures: Throughput time ...... Manufacturing cycle efficiency (MCE) ............ Delivery cycle time.... Percentage of on-time deliveries ................ 3% 95% 4% 92% 10 4% 89% 11 6% 85% 12 www 96% 95% 92% 89% The president has read in industry journals that throughput time, MCE, and delivery cycle time are important measures of performance, but no one is sure how they are computed. You have been asked to assist the company, and you have gathered the following data relating to these measures: Average per Month (in days) 11.5 0.7 Wait time per order before start of production ........ Inspection time per unit ......... Process time per unit .......... Queue time per unit .......... Move time per unit .......... 12.0 0.7 1.9 2.0 4.4 0.4 SR 08 6.0 0.4 Required: 1. For each month, compute the following performance measures: a. Throughput time. b. MCE. c. Delivery cycle time. 2. Using the performance measures given in the main body of the problem and the performance measures computed in (1) above, do the following: a. Identify areas where the company seems to be improving. b. Identify areas where the company seems to be deteriorating. 3. Refer to the inspection time, process time, and so forth, given for month 4. a. Assume that in month 5 the inspection time, process time, and so forth, are the same as for month 4, except that the company is able to completely eliminate the queue time during production using Lean Production. Compute the new throughput time and MCE. Assume that in month 6 the inspection time, process time, and so forth, are the same as in month 4, except that the company is able to eliminate both the queue time during produc tion and the inspection time using Lean Production. Compute the new throughput time and MCE
Related questions
Tombro Industries is in the process of automating one of its plants and developing a flexible manufacturing system. The company is finding it necessary to make many changes in operating procedures. Progress has been slow, particularly in trying to develop new performance measures for the factory.
In an effort to evaluate performance and determine where improvements can be made, management has gathered the following data relating to activities over the last four months:
| Month | ||||||||
| 1 | 2 | 3 | 4 | |||||
| Quality control measures: | ||||||||
| Number of defects | 194 | 172 | 133 | 94 | ||||
| Number of warranty claims | 55 | 48 | 39 | 36 | ||||
| Number of customer complaints | 111 | 105 | 88 | 67 | ||||
| Material control measures: | ||||||||
| Purchase order lead time | 8 days | 7 days | 5 days | 4 days | ||||
| Scrap as a percent of total cost | 1 | % | 1 | % | 2 | % | 3 | % |
| Machine performance measures: | ||||||||
| Machine downtime as a percentage of availability | 5 | % | 6 | % | 6 | % | 10 | % |
| Use as a percentage of availability | 94 | % | 91 | % | 88 | % | 84 | % |
| Setup time (hours) | 8 | 10 | 11 | 12 | ||||
| Delivery performance measures: | ||||||||
| Throughput time | ? | ? | ? | ? | ||||
| Manufacturing cycle efficiency (MCE) | ? | ? | ? | ? | ||||
| Delivery cycle time | ? | ? | ? | ? | ||||
| Percentage of on-time deliveries | 95 | % | 94 | % | 91 | % | 88 | % |
The president has read in industry journals that throughput time, MCE, and delivery cycle time are important measures of performance, but no one is sure how they are computed. You have been asked to assist the company, and you have gathered the following data relating to these measures:
| Average per Month (in days) | ||||
| 1 | 2 | 3 | 4 | |
| Wait time per order before start of production | 10.0 | 12.6 | 13.0 | 15.0 |
| Inspection time per unit | 0.9 | 0.8 | 0.8 | 0.8 |
| Process time per unit | 2.8 | 2.4 | 2.2 | 1.3 |
| Queue time per unit | 3.9 | 4.6 | 5.4 | 7.2 |
| Move time per unit | 0.4 | 0.6 | 0.6 | 0.7 |
Required:
1-a. Compute the throughput time for each month.
1-b. Compute the manufacturing cycle efficiency (MCE) for each month.
1-c. Compute the delivery cycle time for each month.
3-a. Refer to the inspection time, process time, and so forth, given for month 4. Assume that in month 5 the inspection time, process time, and so forth, are the same as for month 4, except that the company is able to completely eliminate the queue time during production using Lean Production. Compute the new throughput time and MCE.
3-b. Refer to the inspection time, process time, and so forth, given for month 4. Assume that in month 6 the inspection time, process time, and so forth, are the same as in month 4, except that the company is able to eliminate both the queue time during production and the inspection time using Lean Production. Compute the new throughput time and MCE.
Exeter Corporation has recently begun a continuous improvementcampaign. As a consequence, there have been many changes inoperating procedures. Progress has been slow, particularly intrying to develop new performance measures for the factory. |
Management has been gathering thefollowing data over the past four months: |
Month | ||||||||
| 1 | 2 | 3 | 4 | |||||
| Quality controlmeasures: | ||||||||
| Customer complaints as apercentage of units sold | 1.0 | % | 1.0 | % | 1.0 | % | 1.1 | % |
| Warranty claims as a percentageof units sold | 1.8 | % | 1.8 | % | 1.8 | % | 1.8 | % |
| Defects as a percentage ofunits produced | 4.3 | % | 3.9 | % | 3.5 | % | 3.0 | % |
| Material controlmeasures: | ||||||||
| Scrap as a percentage of totalcost | 3.0 | % | 2.7 | % | 2.8 | % | 2.5 | % |
| Machine performancemeasures: | ||||||||
| Percentage of machineavailability | 79 | % | 79 | % | 79 | % | 78 | % |
| Use as a percentage ofavailability | 74 | % | 76 | % | 68 | % | 70 | % |
| Average setup time (hours) | 2.3 | 2.3 | 2.3 | 2.3 | ||||
| Delivery performancemeasures: | ||||||||
| Throughput time | ? | ? | ? | ? | ||||
| Manufacturing cycleefficiency | ? | ? | ? | ? | ||||
| Delivery cycle time | ? | ? | ? | ? | ||||
| Percentage of on-timedeliveries | 84 | % | 85 | % | 91 | % | 95 | % |
The president has attendedconferences at which the importance of throughput time,manufacturing cycle efficiency, and delivery cycle time werestressed, but no one at the company is sure how they are computed.The data to compute these measures have been gathered and appearbelow: |
Month | ||||
| 1 | 2 | 3 | 4 | |
| Wait time per orderbefore start of production, in days | 16.8 | 15.0 | 12.0 | 9.0 |
| Inspection time perunit, in days | .1 | .1 | .5 | .6 |
| Process time perunit, in days | .5 | .5 | .5 | .5 |
| Queue time per unit,in days | 5.4 | 5.5 | 5.4 | 5.5 |
| Move time per unit,in days | 1.4 | 1.3 | 1.3 | 1.4 |
| Required: | |
| 1. | For each month, compute the following performance measures:(Round your intermediate calculations and final answers to1 decimal place. Omit the "%" sign in your response.) |
| Month | ||||
| 1 | 2 | 3 | 4 | |
| Throughput time | ||||
| Manufacturing cycleefficiency (MCE) | % | % | % | % |
| Delivery cycletime | ||||
| 3. | Refer to the inspection time,process time, and so forth, given above for month 4. |
| a. | Assume that in month 5 the move time, process time, and soforth, are the same as for month 4, except that through theimplementation of Lean Production, the company is able tocompletely eliminate the queue time during production. Compute thenew throughput time and MCE. (Round your intermediatecalculations and final answers to 1 decimal place. Omit the "%"sign in your response.) |
| Throughput time | ||
| Manufacturing cycleefficiency (MCE) | % | |
| b. | Assume that in month 6 the move time, process time, and soforth, are the same as for month 4, except that the company is ableto completely eliminate both the queue time during production andthe inspection time. Compute the new throughput time and MCE.(Round your intermediate calculations and final answers to1 decimal place. Omit the "%" sign in your response.) |
| Throughput time | ||
| Manufacturing cycleefficiency (MCE) | % | |
