Castner Corporation is considering implementation of a JIT inventory system. The

Question

Castner Corporation is considering implementation of a JIT inventory system. The company’s
industrial engineer recently conducted a study to determine the average number of days spent in
each activity of the production process. The following table summarizes her findings

Production Activity Number of Days
Inspecting materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Storing materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Moving materials into production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Setting up production equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Cutting materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bending materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Assembling finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Painting finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Instructions
a. Identify Castner’s value-added production activities.
b. Identify Castner’s non-value-added production activities.
c. Calculate Castner’s total cycle time.
d. Determine Castner’s manufacturing efficiency ratio.
e. Which of the above activities might be reduced or eliminated if Castner implemented a JIT
system?
f. What ethical issues might be related to eliminating some of the non-value-added activities?

Explanation / Answer

a.

Value added production activities are those activities which are directly related to production process and are those should generate some value addition. Value added production activities are listed as follows.

b.

Non - Value added production activities are those activities which are not directly related to production process and are those need not to generate some value addition. Non - Value added production activities are listed as follows.

c.

Cycle time is starts from when an activity of production begins till the production ends and include all the delay, waiting, breakdown and even the activities which related to start the production. The total cycle time is 50 (3+17+3+2+6+5+9+5) days.

d.

Manufacturing efficiency ratio = Standard time required for production activity / Actual days for total production activity

= 6+5+9+5/ 3+17+3+2+6+5+9+5

= 25 days / 50 days

= 0.50 or 50%

e.

Only material storing activity is reduced or eliminated by implementing JIT system as in JIT material storing is not required. In detail, JIT system material will come to the production area as and when production needs material.

f.

Eliminating non value production activities like inspecting material, storing and moving material will affect the employment of labor which is engaged in non value production departments. For example, if non value production activity like inspecting material is eliminated quality standards will affect and therefore output will come off without quality. Therefore, non value production activities should not directly eliminated from process.

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