EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

2. a. Areas where the company is improving: Quality control. The number of defects has decreased by over 50% in the last four months. Moreover, both warranty claims and customer complaints are down sharply. In short, overall quality appears to have significantly improved. Material control. The purchase order lead time is only half of what it was four months ago, which indicates that purchases are arriving in less time. This trend may be a result of the company’s move toward JIT purchasing. Delivery performance. The process time has decreased from 2.1 days to 1.8 days over the last four months. Problem 10-30 (continued) b. Areas of deterioration: Material control. Scrap as a percentage of total cost has tripled over the last four months. Machine performance. Machine downtime has doubled over the last four months. This may be a result of the greater setup time, or it may just reflect efforts to get the new equipment operating properly. Also note that use of the machines as a percentage of availability is declin-ing rapidly. The use of the machines may be declining as a conse-quence of the shift to JIT. Machines may be utilized less because they are not being used to build excess inventories. Delivery performance. All delivery performance measures are moving in the wrong direction. Throughput time and delivery cycle time are both increasing, and the manufacturing cycle efficiency is decreasing.