Reference no: EM131706501

Creating Value in a Dynamic Business Environment which includes Connect. Ronald W. Hilton 10th Edition

Delivering goods on time requires that they be produced on time. Various operational performance measures have been developed to assess the timeliness of the production process. For example, in a manufacturing firm, manufacturing cycle time is the total amount of production time (or throughput time) required per unit. It can be computed by dividing the total time required to produce a batch by the number of units in the batch. Velocity is defined as the number of units produced in a given time period. Perhaps an even more important operational measure is themanufacturing cycle efficiency (MCE), defined as follows:

Manufacturing cycle effeciency = Processing time/(Processing time + Inspection time + wating time + Move time)

The value of the MCE measure lies in its comparison between value-added time (processing) and non-value-added time (inspection, waiting, and moving). In many manufacturing companies, MCE is less than 10 percent. Firms with advanced manufacturing systems strive for as high an MCE measure as possible.