Question

If Toyota Motor Company receives an order on May 4, begins production on May 17, and ships the order on May 19 immediately following production, then what is the manufacturing cycle efficiency (MCE) ratio?

Answer 1

Answer: Manufacturing Efficiency cycle = 23.077%

Explanation:

Manufacturing Efficiency Cycle ratio is a ratio that measures the percentage of time that is spent on activities that add value in the production of a Good or service in relation to the total cycle time. Total cycle time includes time spent testing and inspecting the product, Packaging the product etc.

Toyota Motor Company received an Order on the 4th of May. Production began on the 17th May which tells us that Value adding Activities Began on the 17th of may and ceased on 19th of may when the order is shipped immediately after production is complete.

4th of May to the 16th = 13 days (13 days includes the 4th of may )

17th of May to the 19th = 3 days (3 days includes the 14th & 17th of may)

Value added activities time = 3 days

total cycle time = 13 days + 3 days = 16 days

Manufacturing Efficiency cycle = Value added activities time/total cycle time

Manufacturing Efficiency cycle = 3/13 = 2307692307

Manufacturing Efficiency cycle = 23.077%

Toyota Manufacturing Efficiency cycle is 23.077%, meaning out of 13 days cycle time only 3 days is spend on value adding activities. Toyota should review their production process and production activities to eliminate activities that do not bring value