1. Example Exercise 27-1 Reducing Lead Time
Lead [pronounced LEED] time measures the time interval between a product entering production and when it is completed. For example, if a product enters production at [CLICK] one o’clock and is completed at [CLICK] 5 o’clock, the lead time is [CLICK] four hours.

2. 2 Example Exercise 27-1 Reducing Lead Time
Lead time can be classified as:
Value-added lead time, which is the time spent in converting raw materials into a finished unit of product.
Non-value-added lead time, which is the time spent while the unit of product is waiting to enter the next production process or is moved from one process to another.
Lead time can be classified as [CLICK] value-added lead time, which is the time spent in converting raw materials into a finished unit of product, or [CLICK] non-value-added lead time, which is the time spent while the unit of product is waiting to enter the next production process or is moved from one process to another.

3. Example Exercise 27-1
Assume that the lead time to manufacture a unit of product is as shown. The value added lead time is 65 minutes calculated by adding the [CLICK] machining, assembly, and packing times. The value added ratio is computed as [CLICK] the value added lead time divided by the total lead time. In this case, it’s [CLICK] 52%.

4. Example Exercise 27-1 Reducing Setup Time
A setup is the effort spent preparing an operation or process for a production run. If setups are long and costly, the batch size for the related production run is normally large. Assume that a product can be manufactured in Process X or Process Y as shown. [CLICK] This table shows [CLICK] that the lead time for Process X is [CLICK] three minutes; however, the lead time for Process Y is [CLICK] 15 minutes. The lead time for Process Y is longer because each unit has to “wait its turn” while other units in the batch are processed. It takes a unit five minutes for each operation—four minutes waiting and one minute in production.

5. Example Exercise 27-1 Process Y
The four minutes that each unit “waits its turn” is called within-batch wait time. The total within batch wait time is computed as [CLICK] the total time to perform operations times the batch size minus 1. The total within-batch wait time for Process Y is [CLICK] 12 minutes computed as shown. The value added ratio is 3 minutes divided by 15 minutes, [CLICK] or 20%. This means that 80% of the lead time in Process Y is non-value added time.

6. Example Exercise 27-1
(a)
For this example exercise, we first need to calculate [CLICK] the value added, the non-value added, and the total lead time of the process for manufacturing gloves. The value added lead time is [CLICK] ten minutes or four minutes for cutting plus six minutes for assembly. The non-value added lead time includes the within-batch wait time of [CLICK] 490 minutes plus the move time of [CLICK] 12 minutes. The within-batch wait time is calculated as ten minutes times 49. One unit is [CLICK] subtracted from the 50-glove batch size since the value-added time includes the time for this unit. In other words, one unit is always in production at any point in time. The total lead time is [CLICK] 512 minutes.
Note that one unit is subtracted for this calculation since it the value added time includes the time for this unit.

7. Example Exercise 27-1
(b)
For part (b), we need to compute the value-added ratio. The value added lead time of 10 minutes divided by the total lead time of 512 minutes yields a value added ratio of [CLICK] approximately 2%.

8. Example Exercise 27-1  For Practice: PE 27-1A, PE 27-1B
Refer to Practice Exercises PE 27-1A and PE 27-1B to practice calculating lead time.
 For Practice: PE 27-1A, PE 27-1B