Fidelity Audio Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final
Question:
The final assembly for each stereo unit requires 18 minutes and is also done in batches of 60 units. A batch of 60 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 60-unit batch is tested one at a time. Each test requires 9 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 60 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 8 minutes per unit.
Instructions
1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 60 units. Round percentages to one decimal place. Categorize the non-value-added time into wait and move time.
2. How could this process be improved so as to reduce the amount of waste in the process?
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Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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