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 Quality control measures: 189 50 106 167 43 100 128 34 83 Number of defects 92 31 62 Number of warranty claims Number of customer complaints Material control measures: Purchase order lead time Scrap as a percent of total cost 8 days 7 days 5 days 4 days 2% 2% 3% 6% Machine performance measures: 6% 91% 10% 84% Machine downtime as a percentage of availability Use as a percentage of availability Setup time (hours) 5% 94% 6% 88% 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 r Month (in da Avera 13.0 0.7 1.2 7.4 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 8.0 0.8 2.8 10.1 11.0 0.7 1.9 5.0 0.4 2.0 4.8 0.4 0.3 Required 1-a. Compute the throughput time for each month. (Round your answers to 1 decimal place.) Throughput Time days days days days Month 1 Month 2 Month 3 Month 4 1-b. Compute the manufacturing cycle efficiency (MCE) for each month. (Round your answers to 1 decimal place.) Manufacturing cycle efficiency (MCE) Month 1 Month 2 Month 3 Month 4 1-c. Compute the delivery cycle time for each month. (Round your answers to 1 decimal place.) Delivery cycle time Month 1 Month 2 Month 3 Month 4 days days days days 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. (Round your answers to 1 decimal place.) Month 5 Throughput time Manufacturing cycle efficiency (MCE) days 3-b. Refer to the move 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.. (Round your answers to 1 decimal place.) Month 6 Throughput time Manufacturing cycle efficiency (MCE) days I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROl, with year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for the most recent year are given below: S 22,505,000 14,105,500 8,399,500 6,145,000 S 2,254,500 S 4,687,500 Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional operating assets The company had an overall return on investment (ROI) of 17.00% last year (considering all divisions). The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $3,261,000. The cost and revenue characteristics of the new product line per year would be Sales Variable expenses Fixed expenses $ 9,750,000 65% of sales $2,595,300 Required 1. Compute the Office Products Division's ROl for the most recent year, also compute the ROl as it would appear if the new product line is added. (Round the "Margin", "Turnover" and "ROi" answers to 2 decimal places.) Total Present New Line Sales Net operating income Operating assets Margin Tumover ROI 2. If you were in Dell Havasi's position, would you accept or reject the new product line? Accept Reject 3. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? Adding the new line would Increase the company's overall ROl Adding the new line would Decrease the company's overall RC 4. Suppose that the company's minimum required rate of return on operating assets is 14.00% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for the most recent year; also compute the residual income as it would appear if the new product line is added. Present Total New Line Operating assets Minimum required return Minimum net operating income Actual net operating income Minimum net operating income Residual income b. Under these circumstances, if you were in Dell Havasi's position, would you accept or reject the new product line? Accept Reject