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Calculating measures requires close attention to the specifics of a particular process

Different firms define these terms in different ways for their own internal use

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Cycle Time: How often does a unit complete the process? Sometimes needed to
distinguish between minimum cycle time and actual cycle time

Bottleneck: factor that limits production. In some settings, labor, information,

materials or order could be a bottleneck. Bottlenecks are important focal points for
management attention

Idle Time: can be applied to a worker or a machine. Waiting is idle time unless other
useful task is performed in the interim. Can be present even in even in a perfectly
balanced process

Capacity: capacity of a process is determined by process bottleneck. Capacity

utilization = actual / capacity = 480/500 = 96%. Capacity and cycle time are closely
related

Balance/Imbalance: If a system is not perfectly balanced there will be potential idle

time at the non- bottleneck parts of the process

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Manufacturing Lead Time - total time required to manufacture an item

Assuming alternating bread-making lines direct to packaging

For the first production line, MLT is at 1.75 hrs (1 + 0.75)
For the second production line, MLT is at 2.5 hrs (1 + 0.75 waiting time + 0.75)
Average MLT is at 2.125 hrs

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For many assembly lines the units are transferred by conveyor from one step to the
next, and movement of the conveyor is paced by the slowest step in the process.

Direct impact of work-in-process on manufacturing lead time

--In case a batch of bread would not bake properly, management may choose to keep
a buffer of one batch to minimize disruptions
--No need to shut down and restart packaging line
--Also, it may take some time to move the bread between steps, either manually or
on a conveyor

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If units must wait between steps, the manufacturing lead time for a process may be
far greater than the sum of the processing times of its individual tasks

Units may wait as work-in- process inventory between tasks, either while other
batches are being processed, or while other units in their own batch are processed

Idle time may also add to the manufacturing lead time

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Lot Size (Batch Size) - Different product types in the same plant may have different lot
sizes. Size of lot may be constrained by physical limitations (size of equipment), size of
order, or a management decision

Setup Time - time spent arranging tools, changing dies, setting machine speeds,
cleaning equipment, etc., in preparation for the beginning of work on a
specific type of product. Does not necessarily mean idle time – possible to setup
while production of the first product type

Run Time – if batch processed sequentially, Total RT = RT per unit x number of units.
More complicated if equipment produces in batches, or process includes multiple
equipment stations

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DLC - Exactly what goes into direct labor content varies by firm. Labor cost differs
from labor content due to imbalance, vacation pay, paid breaks, etc. Even if the
packaging operator is busy for only 40 minutes of every hour, the operator is paid for
an entire hour. Thus, idle time adds to labor cost but does not affect labor content.

DLU - Total available labor time consists of both direct labor content and any idle
time.

All of this discussion has assumed that yields are 100%, i.e., that every unit that
starts through the process goes all the way through every step of the process
without mishap

When calculating process performance measures, carefully consider the details of the
process and the managerial question you are seeking to answer

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The choices made in designing a particular process determine in large part the inputs
needed to provide the process outputs. It also determines in large part the range of
outputs possible

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This effort can be recorded in a process flow diagram.

This will require an analysis of each task and a comparison of how these tasks are
balanced

In many instances you will also need to determine the cost of inputs and relate these
costs to the value of the output in some market by comparing the cost, quality, and
timeliness of this output to the needs of the market.

We've seen that we cannot fully describe a process simply by the physical tasks, but
that we need to consider management decisions ranging from how information is
used to how work is scheduled in the process.

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