Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 53

Manufacturing Cycle Efficiency Waymouth Manufacturing operates a contract manufacturing plant located in Dublin, Ireland. The plant provides a variety of electronics products and components to consumer goods manufacturers around the world. Cycle time is a critical success factor for Waymouth, which has developed a number of measures of manufacturing speed. Waymouth has studied the matter and found that competitive contract manufacturers have manufacturing cycle times (MCE) of about 40 percent. When last calculated, Waymouth’s MCE was 35 percent.

Some key measures from the recent month’s production, averaged over all the jobs during that period, are as follows:

Activity	Average Time
New product development	30 hours
Materials handling	3
Order setup	6
Machine maintenance	3
Order scheduling	1
Inspection of completed order	5
Pack and move to storage or ship	2
Manufacturing assembly	23
Order taking and checking	3
Receiving and stocking raw materials	6
Inspection of raw materials	2

Required Determine the manufacturing cycle efficiency (MCE) for the recent month. What can you infer from the MCE you calculated?

Step 1 of 3

Manufacturing cycle efficiency is the ratio of process time and total cycle time which includes process time, delivery time, wait time and inspection time. It tells about the ratio of value-added activities in all manufacturing activities.