Compute the value added ratio

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Reference no: EM13965756

Extreme Wreaths, Inc. makes wreaths in batches of 12 at a time. The cutting process takes 4 minutes per wreath, the assembly process is 6 minutes per wreath, and the decorating process time is 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting process to the assembly process. The cutting and assembly process are done at the same time, but only one wreath can be decorated at a time.

In an effort to improve the lead time, the company has tried reducing the batch size to 8 units. The new process is as follows: cutting process - 3 minutes, assembly process - 4 minutes, and the decorating process is still 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting process to the assembly process. The cutting and assembly process are done at the same time, but only one wreath can be decorated at a time.

(a) Compute the value added, nonvalue added, and the total lead time of the wreath process for both the old and the new manufacturing process.

(b) Compute the value added ratio. Round to the nearest decimal.

Reference no: EM13965756

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