Time Measurement

**TIME MEASUREMENT** **FORMULAS** 1. Velocity = Units / Time * Gaano karami nagagawang product 2. Cycle Time = Time / Units * Gaano kabilis nagagawa ang isang product. Reciprocal lang ng velocity. 3. Manufacturing Cycle Time (MCE) = * Value added time → P/(P+M+I+W) * Process time - Value added * Move time - Non-value added * Inspection time * Wait/Queue time **P1** A manufacturing cell has the theoretical capacity to produce 360,000 stereo speakers per quarter. The conversion cost per quarter is $720,000. There are 60,000 production hours used within the cell per quarter. **1a. Theoretical Velocity (per hour)** = 360,000 units * 1 quarter / 1 quarter * 60,000 hrs = 6 units/hr **1b. Theoretical Cycle time (mins/unit)** = 1 quarter * 60 mins / 360,000 units * 1 quarter = 10 mins/unit **Alternative Solution form B:** = 1 hrs * 60 mins / 6 units * 1 hrs = 10 mins/unit **2. Ideal Amount of Conversion Cost:** a. Per Minute = $720,000 * 1 quarter / 60,000 hrs * 1 quarter * 1 hr / 60 mins = $0.20 per min. b. Per Unit = 10 mins * $0.20 / 1 min = $2 per unit **3. Manufacturing Cycle Efficiency (MCE)** Process = 10 Move = 12 (given) Wait = 10 Inspection = 18 Throughput = 50 mins Conversion cost per unit (actual) = 50 mins * $0.20 / 1 min = $10 per unit **Franco, Abegail Concepcion P.** Average delivery cycle time = 8 days Average throughput time = 4 days Move = 0.9 day Queue = 2.1 days MCE = 25% Inspection = 2 4(25%) = (VAT / 4 days) * 4 VAT = 10 days **Franco** Average Wait time = (92x1.2*) + (20x0.8*) / 2*(300-192x1-20x0.8) = 0.418 hrs **Additional FORMULAS** 5. Conversion cost per unit = Cycle Time x Conversion Cost per time 6. Delivery Cycle Time = Wait time + Manufacturing time + Delivery Time 7. Customer Response Time = Receipt time + (Waiting time + Manufacturing time) + Delivery Time 8. Waiting Time = (Avg. Demand x Manufacturing Time) / 2 x Unused capacity **P3.1 Little Dog Unlimited** Little Dog Unlimited makes small motorcycles. The monthly demand ranges from 80-100 motorcycles. The average demand is 92 motorcycles. The plant operates 300 hours a month. Each cycle takes approx. 1.5 hours. What is the average waiting time & delivery cycle time for cycles? **Average waiting time:** = 92x1.5^2 / 2x[300-92x1.5] = 207 / 324 = 0.639 hour **Delivery Cycle time:** = 0.639 hour + 1.5 hours = 2.139 hours **P3.2** If the company adds a new line of scooters, initial demand will be 20 per month. Each scooter will take 1 hour to make. What are the average waiting times & delivery cycle times if both cycles are produced? **Average waiting time:** = (92x1.5^2 + 20x1^2) / 2x[300-92x1.5-20x1] = 227 / 284 = 0.799 hour **Delivery Cycle time** **Motorcycle:** = 0.799 hour + 1.5 hours = 2.299 hrs **Scooter:** = 0.799 hour + 1 hour = 1.799 hrs *Same waiting time bcs same plant/assembly line* **P3.3 (Check Seatwork for solution)** To offset approaching production capacity, expanding the assembly line is possible. This will decrease manu. time for all products by 20%. What are the average waiting times & delivery times if both are produced & the assembly line is enlarged? **Delivery Cycle time** **Motorcycle:** = 0.418 hr + 1.2 hrs = 1.618 hrs **Scooter:** = 0.418 hr + 0.8 hrs = 1.218 hrs **P3.4** Expanding the assembly line will increase the costs of cycles from $400 to $500 & scooters from $200 to $240. The change will also cause increases in prices from $700 to $750 (cycles) & from $450 to $500 (scooters). Assume average sales & that sales equal production. **a. Expected monthly margin w/o scooters, sells all 92, w/o changing assembly line?** **b. Expected monthly contribution w/ current & new assembly time?** **c. What action do you recommend?** **W/o changing the assembly line** **Total Analysis** | | Cycles | Scooters | Total | |--------|--------|----------|-------| | Sales | 64,400 | 9,000 | 73,400 | | Cost of Manufacturing | 36,800 | 4,800 | 41,600 | | Expected Margin | 27,600 | 5,000 | 32,600 | **W/ new assembly line** | | Cycles | Scooters | Total | |--------|--------|----------|-------| | Sales | 69,000 | 10,000 | 79,000 | | Cost of Manufacturing | 46,000 | 4,800 | 50,800 | | Expected Margin | 23,000 | 5,200 | 28,200 | **Change in Expected Margin** | | | | |--------|--------|------| | | | -4,400 | **ALTERNATIVE SOLUTION (Differential Analysis)** **Change in Sales:** | | | | |--------|--------|------| | Cycles | 92x(750-700) | 4,600 | | Scooters | 20x(500-450) | 1,000 | | | | 5,600 | **Change in Manufacturing Cost:** | | | | |--------|--------|------| | Cycles | 92x(500-400) | 9,800 | | Scooters | 20x(240-200) | 800 | | | | 10,600 | **Change in Expected Margin** | | | | |--------|--------|------| | | | -4,400 | **Recommended Action:** Produce both motorcycles & scooters but without changing / expanding assembly line.