Manufacturing Cycle Time:
The time taken from ordering raw material inventory to putting it in manufacturing production process to producing the finished goods . this can be categorized into following components as below
- Process Time : The actual time taken in processes where the raw material is converted into finished goods . This is also called value added activity which can be reduced by using various techniques like kaizen which is continuous improvement technique
- Inspection Time : The time taken for inspection of quality of raw material , work in process at different process end and finished goods . This is part of non value added activity
- Move Time : The time taken for movement of raw material and work in process goods and people between different process . This is part of non value added activity
- Wait time : The time taken between getting the production order and ordering the raw material inventory and actual arrival at production floor and during the process . This is part of non value added activity
The formula to calculate manufacturing cycle time is given below
Manufacturing Cycle Efficiency:
This is ratio which calculated the total time spend on value added activity from the total manufacturing cycle time and is represented in percentage terms
The formula to calculate manufacturing cycle efficiency is given below
The manufacturing cycle time
The manufacturing cycle time is 15 days
Following information is given
- Process time is 6.0 days is also value added activity time
- Inspection time is 0.8 days
- Move time is 3.2 days
- Wait time is 5.0 days
The formula to calculate manufacturing cycle time is given below
The manufacturing cycle time is 15 days
The manufacturing cycle efficiency is 40%
Following information is given
- Process time is 6.0 days also value added activity time
- Inspection time is 0.8 days
- Move time is 3.2 days
- Wait time is 5.0 days
The formula to calculate manufacturing cycle time is given below
The formula to calculate manufacturing cycle efficiency is given below
The manufacturing cycle efficiency is 40% which shows 60% time is spend on non value added activities which should be reduced to bring more efficiency in the production process and resulting in faster delivery to customer
The revised manufacturing cycle efficiency is 54.55%
Following information is given
- Process time is 6.0 days also value added activity time
- Inspection time is 0.8 days
- Revised Move time is 2 days
- Revised Wait time is 2.2 days
The formula to calculate manufacturing cycle time is given below
The formula to calculate manufacturing cycle efficiency is given below
The manufacturing cycle efficiency has increased to 54.55% which shows reduction in non value added activities to 45.45% from previous non value added activities of 60% . Which has brought more efficiency in the production process and resulting in faster delivery to customer?

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Chapter D Solutions
FUND.ACCT.PRIN.-CONNECT ACCESS
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