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 74 units. The process time for each step is as follows:

Process Step 1	7	minutes
Process Step 2	5	minutes
Process Step 3	9	minutes
Process Step 4	4	minutes

The time required to move each batch between steps is 17 minutes. In addition, the time to move raw materials to Process Step 1 is also 17 minutes, and the time to move completed units from Process Step 4 to finished goods inventory is 17 minutes.

The new just-in-time layout will allow the company to reduce the batch sizes from 74 units to 4 units. The time required to move each batch between steps and the inventory locations will be reduced to 3 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.

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

Answer 1

	Present Approach		Proposed Approach
Value-added time	25 Min		25 Min
Non-value-added time	85 Min		15 Min
Total lead time	110 Min		40 Min
Value-added ratio (as a percent)	22.73%		62.50%
Both Case
Valued added time = 7+5+9+4 = 25 Min
Present Approach
Valued added time = 7+5+9+4 = 25 Min
Non value Added Time = 17+17+17+17+17 = 85 Min
Total lead Time = 25+85 = 110 Min
Value-added ratio (as a percent) = 25/110 = 22.73%
Proposed Approach
Valued added time = 7+5+9+4 = 25 Min
Non value Added Time = 3+3+3+3+3 = 15 Min
Total lead Time = 15+25 = 40 Min
Value-added ratio (as a percent) = 25/40
Value-added ratio (as a percent) = 62.50%