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PROBLEM 11-19 Internal Business Process Performance Measures LO11-3 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 2 3 4 1 124 185 46 102 163 39 96 30 79 91 27 58 7 days 8 days 196 5 days 2% 4 days 3% 1% 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 measuresi Throughput time... Manufacturing cycle efficiency (MCE) Delivery cycle time Percentage of on-time deliveries 4% 3% 95% 8 92% 10 4% 89% 11 6% 85% 12 7 2 ? 96% ? ? ? 95% ? ? ? 92% ? 2 ? 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) 1 2 3 4 Walt time per order before start of production... Inspection time per unit Process time per unit Queue time per unit Move time per unit 9.0 0.8 2.1 2.8 0.3 11.5 0.7 2.0 4.4 0.4 12.0 0.7 1.9 6.0 0.4 14.0 0.7 1.8 7.0 0.5 Required: 1. For each month, compute the following performance measures: a. Throughput time. b. MCE c. Delivery cycle time. 2 2 Using the performance measures given in the main body of the problem and the performance measures computed in (1) above, do the following 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. 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 b. 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