In August, Lannister Company introduced a new performance measurement system in manufacturing operations. One of the new performance measures was lead time. The lead time was determined by tagging a random sample of items with a log sheet throughout the month. This log sheet recorded the time that the item started and the time that it ended production, as well as all steps in between. The controller collected the log sheets and calculated the average lead time of the tagged products. This number was reported to central management and was used to evaluate the performance of the plant manager. The plant was under extreme pressure to reduce lead time because of poor lead time results reported in September.
The following memo was intercepted by the controller.
Date: October 1
To: Hourly Employees
From: Plant Manager
During last month, you noticed that some of the products were tagged with a log sheet. This sheet records the time that a product enters production and the time that it leaves production. The difference between these two times is termed the “lead time.” Our plant is evaluated on improving lead time. From now on, I ask all of you to keep an eye out for the tagged items. When you receive a tagged item, it is to receive special attention. Work on that item first, and then immediately move it to the next operation. Under no circumstances should tagged items wait on any other work that you have. Naturally, report accurate information. I insist that you record the correct times on the log sheet as the product goes through your operations.
How should the controller respond to this discovery?

  • CreatedJune 27, 2014
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