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: 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 measures: Throughput time Manufacturing cycle efficiency (MCE) Delivery cycle time Percentage of on-time deliveries Wait 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 0.9 2.8 3.0 9.3 190 51 107 11.4 0.7 2.0 4.3 8.6 12.0 0.7 1.6 5.1 8.6 8 days 1% 3% 94% 8 1 ? ? ? 95% Average per Month (in days) 1 2 3 4 168 44 101 14.0 0.7 1.2 7.4 9.7 7 days 1% 4% 91% 10 ? ? 2 ? 94% Month 129 35 84 5 days. 2% 4% 88% 11 ? ? 3 ? 91% 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: 90 32 63 4 days 3% 6% 84% 12 4 ? ? ? 88%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 2PA: The demand for solvent, one of numerous products manufactured by Logan Industries Inc., has dropped...

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1-a. Compute the throughput time for each month.

1-b. Compute the manufacturing cycle efficiency (MCE) for each month.

1-c. Compute the delivery cycle time for each month.

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.

3-b. Refer to the inspection 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.

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:
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 measures:
Throughput time
Manufacturing cycle efficiency (MCE)
Delivery cycle time
Percentage of on-time deliveries
Wait 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
0.9
2.8
3.0
0.3
190
51
107
11.4
0.7
2.0
4.3
0.6
12.0
0.7
1.6
5.1
0.6
8 days
1%
3%
94%
8
?
Average per Month (in days)
1
2
3
4
1
?
?
95%
168
44
101
14.0
0.7
1.2
7.4
0.7
7 days
1%
4%
91%
10
2
?
?
?
94%
Month
129
35
84
5 days
2%
4%
88%
11
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:
3
?
?
?
91%
90
32
63
4 days.
3%
6%
84%
12
4
?
?
?
88%

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