Exercises

12. Each student will have a different answer. No solution provided.

10. Each student will have a different answer. No solution provided.

However, it is likely that students will determine that quality
inspection is non-value-added for the clothing manufacturer and
value-added for the pharmaceutical company.

13. Each student will have a different answer. No solution provided.

11. a. None of the items are value-added activities; products should be

designed so that schedule changes should not be needed.

b. Number of factory schedule changes is the driver.

c. Eliminate factory schedule changes except for those asked for by

a customer (in which case the customer should be charged for the
cost of the change) or for critical changes necessary to realize
significant quality improvements and cost reductions.

16. a. Cycle time = 6 + 180 + 3 + 3 + 2 + 6 = 200 hours

b. Value-added processing time = 3 hours of mixing and cooking + 2

hours of bottling
MCE = (3 + 2) ÷ 200 = 5 ÷ 200 = 2.5%

17. a. Value-added activities: Time

Remove sod and level site 10
Build forms 12
Mix and pour concrete 5
Level concrete and smooth 2
Remove forms 1
Total 30 hours

b. Non-value-added activities: Time

Purchase materials 5
Obtain rental equipment 3
Drying time 22
Return rental tools 1
Clean up 2
Total 33 hours

c. Total cycle time = 30 + 33 = 63 hours

MCE = 30 ÷ 63 = 47.6%
14. a. Value-added activities: Time
Measuring and cutting 3
Assembling 7
Building fireplace 9
Pegging logs 4
Cutting & framing 2
Sealing joints 4
Total value-added time 29 days

b. Non-value-added activities Time

Receiving 1
Storing 5
Handling 7
Setting up & moving scaffolding 6
County inspections 3
Total non-value-added time 22 days

c. Total cycle time = 29 + 22 = 51 days

MCE = 29 ÷ 51 = 56.9%

d. VA activities are those that increase the worth of the product or

service in the eyes of the customer and for which the customer is
willing to pay. NVA activities are those that do not increase a
product’s value in the customer’s perspective.

15. a. Receiving ingredients 120

Moving ingredients to stockroom 80
Storing ingredients in stockroom 7,160
Moving ingredients from stockroom 80
Mixing ingredients 360
Packaging ingredients 150
Moving packaged seasoning to warehouse 100
Storing packaged seasoning in warehouse 20,000
Moving packaged seasoning from warehouse to trucks 120
Total minutes of cycle time 28,170

b. The value added functions are (1) mixing ingredients and (2)
packaging ingredients. (360 min + 150 min = 510 min)

c. MCE = (360 + 150)  28,170 = 510 ÷ 28,170 = 1.8%

d. The company could do many things to improve its MCE. The
primary areas on which to concentrate are the times spent storing
ingredients in the stockroom and storing packaged seasoning in
the warehouse. Probably the most significant improvement in
MCE would come from adopting JIT (just-in-time) management of
all inventories, which would allow the firm to concentrate on
reducing total cycle time by not purchasing materials until they
are needed and not producing finished goods until they are
demanded by customers.