Calculate Lead Time Orion Devices Inc. is considering a new just-in-time product

Question

Calculate Lead Time

Orion Devices Inc. is considering a new just-in-time product cell. The present manufacturing approach produces a product in four separate steps. The production batch sizes are 58 units. The process time for each step is as follows: Process Step 1 7 minutes Process Step 2 5 minutes Process Step 3 4 minutes Process Step 4 9 minutes The time required to move each batch between steps is 10 minutes. In addition, the time to move raw materials to Process Step 1 is also 10 minutes, and the time to move completed units from Process Step 4 to finished goods inventory is 10 minutes. The new just-in-time layout will allow the company to reduce the batch sizes from 58 units to 3 units. The time required to move each batch between steps and the inventory locations will be reduced to 2 minutes. The processing time in each step will stay the same. Determine the value-added, non-value-added, total lead times, and the value-added ratio under the present and proposed production approaches. If required, round percentages to one decimal place.

PLEASE SHOW ALL WORK, WHERE NUMBERS COME FROM.

In this exercise for Present:
Value-added processing time = Add together Process steps 1-4
Non-value-added time = Total within-batch wait time + Move time, where Total Within-Batch Wait Time = (Total Time to Perform Operations) x (Batch Size - 1).
Add value-added processing time + non-value-added processing time to obtain total processing time.
Calculate Value-Added Ratio = Value-Added Process Time ÷ Total Process Time
In this exercise for Proposed:
Value-added processing time = Add together Process steps 1-4
Non-value-added time = Total within-batch wait time + Move time, where Total Within-Batch Wait Time is obtained by multiplying the process time by the remaining units in the batch (waiting their turn)
Add value-added processing time + non-value-added processing time to obtain total processing time.
Calculate Value-Added Ratio = Value-Added Process Time ÷ Total Process Time

Present Approach Proposed Approach Value-added time 25 min 25 min Non-value-added time min min Total lead time min min Value-added ratio (as a percent) % %

Explanation / Answer

Solution:

1) Value-added time, Non value added time, Total lead time and Value-added ratio under Present Approach:

Value added ratio = Value Added Process Time ÷ Total Process Time

= 25 / 1,500

= 0.0167

= 1.67%

Working Note:

Value added time = 7 + 5 + 4 + 9 = 25 Minutes

Total with in batch wait time = (Total Time to Perform Operations) x (Batch Size - 1)

= 25 * (58 - 1)

= 25 * 57

= 1,425

Move time = 5 Moves (from raw materials to finished goods) * 10 Minutes

= 5 * 10

= 50

2) Value-added time, Non value added time, Total lead time and Value-added ratio under Proposed Approach:

Value added ratio = Value Added Process Time ÷ Total Process Time

= 25 / 85

= 0.2941

= 29.41%

Working Note:

Value added time = 7 + 5 + 4 + 9 = 25 Minutes

Total with in batch wait time = (Total Time to Perform Operations) x (Batch Size - 1)

= 25 * (3 - 1)

= 25 * 2

= 50

Move time = 5 Moves (from raw materials to finished goods) * 2 Minutes

= 5 * 2

= 10

Summary:

Present Approach Value added time Non value added time Total time Processing Time                                 25                 25 Total with in batch wait time                                    1,425           1,425 Move time                                          50                 50 Total                                 25                                    1,475           1,500

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