Universal Valve Company Capacity Exercises


Capacity analysis provides an overview of how effectively you use time in each cell.

The time is categorized as either:

“Productive Capacity” – making “good” parts;

“Non-Productive Capacity” – time lost to non value-adding activities;

“Available Capacity” – time available for use.

Total Available time (seconds) = Number of shifts run per day x Crew per shift x (hours worked per shift x60 x 60) x Working days in week x 3,600 seconds


Productive time is: Number of "good quality" parts produced x average cycle time (seconds)

Productive Capacity = productive time/ total available time x 100%

Non-Productive time is: Time lost to scrap (seconds) = quantity scrapped x average

cycle time (seconds) Time lost to downtime (seconds) Time lost to changeovers (seconds) Time in meetings/ 5S (seconds)

Non-Productive Capacity = Non-Productive time/ total available time x 100%

Available Capacity = 100% - (Productive Capacity + Non-Productive Capacity)


You are the management team of the Universal Valve Company.

The Plastics Value Stream at the Universal Value Company comprises four cells.

Weekly cell performance measures have been established for each cell and a box score has been implemented for the Value Stream. This data is given on the next slide.

Your task:

Calculate the capacity of each cell in the Value Stream.

What capacity figures would you use in your Value Stream box score ?


Week 28

Cells:Injection Moulding Deflashing Machining Assembly

Total Value Stream

Cell 1 Cell 2 Cell 3 Cell 4Cell Board Performance Measures:

Quantity Processed 100,000 76,000 74,480 62,563 60,061First Time Through % 76% 98% 84% 96% 60%

Average Cycle Time (seconds) 2 5 5 15On Time Delivery 98% 80% 85% 75% 50%

Average Set-Up time (minutes) 15 0 25 0Number of Set-Ups in week 14 0 25 0

Shifts run each day 2 2 2 2Crew per shift 1 2 3 3 18

Working time per shift (hours) 7.50 7.50 7.50 7.50Working Days in Week 5 5 5 5

Time in Meetings/ 5S (minutes) 150 150 150 150 600Downtime (minutes) 100 160 600 240 1,100

Floor Space m2 50 40 40 50 180

Total Units Produced and Sold by Value Stream 60,061


Value Stream Weekly P&LIncome $ 110,000

Material Cost $ 49,400 Energy Costs $ 1,541

Wages, Salaries and Benefits $ 25,937 Other Costs $ 998

Total Value Stream Cost $ 77,876Value Stream Profit $ 32,124

Value Stream Profit % 29.20%

Income per Piece Sold $ 1.83Material Cost per Piece processed in Cell 1 $ 0.49

Total Value Stream Cost per unit sold $ 1.30

1,541 25,937

998

1.830.491.30


ANSWER SHEETInjection Moulding Deflashing Machining Assembly

Cell 1 Cell 2 Cell 3 Cell 4Employee Capacity

Total Available Time (seconds) 270,000 540,000 810,000 810,000

Productive Time (seconds) 152,000 372,400 312,816 900,910Productive Capacity 56.30% 68.96% 38.62% 111.22%

Time lost to scrap (seconds) 48,000 7,600 59,584 37,538 Time lost to Downtime (seconds) 6,000 9,600 36,000 14,400

Time lost to Changeovers (seconds) 12,600 - 37,500 - Time in meetings/ 5S (seconds) 9,000 9,000 9,000 9,000

Total Non-Productive Time (seconds) 75,600 26,200 142,084 60,938

Non-Productive Capacity 28.00% 4.85% 17.54% 7.52%

Available Capacity 15.70% 26.19% 43.84% -18.75%

Injection Moulding Deflashing Machining Assembly

Cell 1 Cell 2 Cell 3 Cell 4


SUMMARY BOX SCORES

Week 28Performance Data

Quantity Processed and Sold 60,061 Value Stream First Time Through % 60%

Value Stream On Time Delivery % 50%Sales per Employee $ 6,111

Value Stream Cost per Unit Sold $ 1.30

Capacity at Bottleneck Cell 4Productive Capacity at Bottleneck % 111.22%

Non-Productive Capacity at Bottleneck % 7.52%Available Capacity at Bottleneck % -18.75%

Financial PerformanceIncome $ 110,000



Total Value Stream Cost $ 77,876 Value Stream Profit $ 32,124


Week 28


Things move fast in the Plastics Value Stream and in Week 29, improvement activity has already generated a number of improvements: Average set-up time has been reduced by 75%, though the

number of set-ups has increased to allow smaller batches. Improvements in standard work have improved the first

time through in each cell (reducing scrap). On-Time delivery has improved. Downtime has been reduced.

Your task:

Calculate the impact of the improvements - Capacity in each cell; and Box Score: impact of reduction in scrap. No other costs are saved at this time.


Week 29


Total Value Stream







Time in Meetings/ 5S (minutes) 150 150 150 150 600Downtime (minutes) 40 80 300 120 540

Floor Space m2 50 40 40 50 180








Income per Unit Sold $ 1.83Material Cost per Piece processed in Cell 1 $ 0.49


1,541 25,937

998

1.830.491.30




Total Available Time (seconds) 270,000 540,000 810,000 810,000

Productive Time (seconds) 134,441 332,742 306,122 900,000Productive Capacity 49.79% 61.62% 37.79% 111.11%









SUMMARY BOX SCORES

Week 28 Week 29Performance Data

Quantity Processed and Sold 60,061 60,000 Value Stream First Time Through % 60% 78%

Value Stream On Time Delivery % 50% 75%Sales per Employee $ 6,111 6,100

Value Stream Cost per Unit Sold $ 1.30 1.11

Capacity at Bottleneck Cell 4 4Productive Capacity at Bottleneck % 111.22% 111.11%

Non-Productive Capacity at Bottleneck % 7.52% 4.27%Available Capacity at Bottleneck % -18.75% -15.38%

Financial PerformanceIncome $ 110,000 109,800

Material Cost $ 49,400 37,860 Energy Costs $ 1,541 1,541

Wages, Salaries and Benefits $ 25,937 25,937 Other Costs $ 998 998

Total Value Stream Cost $ 77,876 66,336 Value Stream Profit $ 32,124 43,464

Value Stream Profit % 29.20% 39.58%

Week 29


In Week 30, your sales team comes to you with an immediate order for an additional 10,000 pieces at $1.50 per piece. Should you take the order ?

A member of staff is redeployed from the Machining Cell to Assembly to provide the necessary capacity. This has no cost impact.

Your task:

Calculate the impact of the improvements - Capacity in each cell; and Box Score: additional sales.


Week 30


Total Value Stream








Floor Space m2 50 40 40 50 180










1,541 25,937

998

1.780.491.04




Total Available Time (seconds) 270,000 540,000 540,000 1,080,000

Productive Time (seconds) 156,849 388,201 357,145 1,050,006Productive Capacity 58.09% 71.89% 66.14% 97.22%









SUMMARY BOX SCORES

Week 28 Week 29 Week 30Performance Data

Quantity Processed and Sold 60,061 60,000 70,000 Value Stream First Time Through % 60% 78% 78%

Value Stream On Time Delivery % 50% 75% 75%Sales per Employee $ 6,111 6,100 6,933

Value Stream Cost per Unit Sold $ 1.30 1.11 1.04

Capacity at Bottleneck Cell 4 4 4Productive Capacity at Bottleneck % 111.22% 111.11% 97.22%

Non-Productive Capacity at Bottleneck % 7.52% 4.27% 3.48%Available Capacity at Bottleneck % -18.75% -15.38% -0.71%

Financial PerformanceIncome $ 110,000 109,800 124,800

Material Cost $ 49,400 37,860 44,170 Energy Costs $ 1,541 1,541 1,541

Wages, Salaries and Benefits $ 25,937 25,937 25,937 Other Costs $ 998 998 998

Total Value Stream Cost $ 77,876 66,336 72,646 Value Stream Profit $ 32,124 43,464 52,154

Value Stream Profit % 29.20% 39.58% 41.79%

Week 30


In Week 31, you make further improvements. Scrap and downtime are further reduced, and improvements are made to set-up times and downtime.

You are able to reduce the amount of space that the Value Stream occupies - resulting in a 20% reduction in energy costs.

Your sales team approach you with an opportunity for further sales of 20,000 pieces at $1.50 per piece. This would entail employing 4 additional staff in the Assembly cell at a total additional cost of $5,000 per week.

Your task: Calculate the impact of the improvements - Capacity in

each cell; and box score.


Week 31


Total Value Stream








Floor Space m2 40 30 34 40 144










1,233 30,937

998

1.720.490.91




Total Available Time (seconds) 270,000 540,000 540,000 1,620,000

Productive Time (seconds) 191,307 473,485 454,545 1,349,999Productive Capacity 70.85% 87.68% 84.18% 83.33%

Time lost to scrap (seconds) 7,971 4,783 18,939 13,636 Time lost to Downtime (seconds) - - 1,800 -




Available Capacity 21.08% 9.77% 5.87% 15.27%




SUMMARY BOX SCORES

Week 28 Week 29 Week 30 Week 31Performance Data

Quantity Processed and Sold 60,061 60,000 70,000 90,000 Value Stream First Time Through % 60% 78% 78% 90%

Value Stream On Time Delivery % 50% 75% 75% 88%Sales per Employee $ 6,111 6,100 6,933 7,036

Value Stream Cost per Unit Sold $ 1.30 1.11 1.04 0.91

Capacity at Bottleneck Cell 4 4 4 3Productive Capacity at Bottleneck % 111.22% 111.11% 97.22% 84.18%

Non-Productive Capacity at Bottleneck % 7.52% 4.27% 3.48% 9.95%Available Capacity at Bottleneck % -18.75% -15.38% -0.71% 5.87%

Financial PerformanceIncome $ 110,000 109,800 124,800 154,800

Material Cost $ 49,400 37,860 44,170 48,823 Energy Costs $ 1,541 1,541 1,541 1,233

Wages, Salaries and Benefits $ 25,937 25,937 25,937 30,937 Other Costs $ 998 998 998 998

Total Value Stream Cost $ 77,876 66,336 72,646 81,992 Value Stream Profit $ 32,124 43,464 52,154 72,808

Value Stream Profit % 29.20% 39.58% 41.79% 47.03%

Week 31


In Week 32, you have the option of making some radical transformation: You can either combine cells 1 and 2; or combine cells 3 and 4.

For resourcing and technical reasons you cannot make both changes.

Either change will improve FTT, cycle times, and OTD; and will reduce space and energy costs. There will be no impact on sales.

Your task:

Decide which change should you make.

Calculate the impact of both improvements and choose which is the best to make first. Review the impact on capacity in each cell; and the Box Score.


Week 32: Option 1, Combine cells 1 and 2

Cells: Empty Space

Injection Moulding and

Deflashing Machining AssemblyTotal Value

StreamCell 1 Cell 1A Cell 3 Cell 4

Cell Board Performance Measures:Quantity Processed 0 95,653 94,696 90,909 90,000

First Time Through % 0% 99% 96% 99% 94%Average Cycle Time (seconds) 0 6 5 15

On Time Delivery 0% 99% 97% 97% 93%





Floor Space m2 0 50 34 40 124



Week 32: Option 2, Combine cells 3 and 4

Cells:Injection Moulding Deflashing

Machining and Assembly Empty Space

Total Value Stream

Cell 1 Cell 2 Cell 3A Cell 4Cell Board Performance Measures:

Quantity Processed 95,654 91,828 90,910 0 90,000First Time Through % 96% 99% 99% 0% 94%






Floor Space m2 40 30 60 0 130



Week 32: Option 1, Combine cells 1 and 2Income $ 154,800







1,062 28,125

998

1.720.490.86


Week 32: Option 2, Combine cells 3 and 4Income $ 156,000







1,113 30,937

998

1.730.500.90


ANSWER SHEET OPTION 1

Week 32: Option 1, Combine cells 1 and 2 Empty Space


Deflashing Machining AssemblyCell 1 Cell 1A Cell 3 Cell 4

Employee CapacityTotal Available Time (seconds) 0 540,000 540,000 1,620,000

Productive Time (seconds) 0 520,831 454,543 1,349,993Productive Capacity 0.00% 96.45% 84.17% 83.33%

Time lost to scrap (seconds) - 5,261 18,939 13,636 Time lost to Downtime (seconds) - - 1,800 -

Time lost to Changeovers (seconds) - 4,800 24,000 - Time in meetings/ 5S (seconds) - 9,000 9,000 9,000

Total Non-Productive Time (seconds) 0 19,061 53,739 22,636



Empty Space


Deflashing Machining AssemblyCell 1 Cell 1A Cell 3 Cell 4


ANSWER SHEET OPTION 2

Week 32: Option 2, Combine cells 3 and 4Injection Moulding Deflashing


Cell 1 Cell 2 Cell 3A Cell 4Employee Capacity

Total Available Time (seconds) 270,000 540,000 2,160,000 0

Productive Time (seconds) 183,656 454,548 1,800,009 0Productive Capacity 68.02% 84.18% 83.33% 0.00%

Time lost to scrap (seconds) 7,652 4,591 18,182 - Time lost to Downtime (seconds) - - 1,800 -

Time lost to Changeovers (seconds) 4,800 - 24,000 - Time in meetings/ 5S (seconds) 9,000 9,000 9,000 -

Total Non-Productive Time (seconds) 21,452 13,591 52,982 0



Injection Moulding Deflashing


Cell 1 Cell 2 Cell 3A Cell 4


SUMMARY BOX SCORES

Week 28 Week 29 Week 30 Week 31Week 32: Option 1

Performance DataQuantity Processed and Sold 60,061 60,000 70,000 90,000 90,000

Value Stream First Time Through % 60% 78% 78% 90% 94%Value Stream On Time Delivery % 50% 75% 75% 88% 93%

Sales per Employee $ 6,111 6,100 6,933 7,036 7,740 Value Stream Cost per Unit Sold $ 1.30 1.11 1.04 0.91 0.86

Capacity at Bottleneck Cell 4 4 4 3 1AProductive Capacity at Bottleneck % 111.22% 111.11% 97.22% 84.18% 96.45%

Non-Productive Capacity at Bottleneck % 7.52% 4.27% 3.48% 9.95% 3.53%Available Capacity at Bottleneck % -18.75% -15.38% -0.71% 5.87% 0.02%

Financial PerformanceIncome $ 110,000 109,800 124,800 154,800 154,800

Material Cost $ 49,400 37,860 44,170 48,823 46,870 Energy Costs $ 1,541 1,541 1,541 1,233 1,062

Wages, Salaries and Benefits $ 25,937 25,937 25,937 30,937 28,125 Other Costs $ 998 998 998 998 998

Total Value Stream Cost $ 77,876 66,336 72,646 81,992 77,055 Value Stream Profit $ 32,124 43,464 52,154 72,808 77,745

Value Stream Profit % 29.20% 39.58% 41.79% 47.03% 50.22%

Week 32: Option 1


SUMMARY BOX SCORES


Performance DataQuantity Processed and Sold 60,061 60,000 70,000 90,000 90,000

Value Stream First Time Through % 60% 78% 78% 90% 94%Value Stream On Time Delivery % 50% 75% 75% 88% 91%

Sales per Employee $ 6,111 6,100 6,933 7,036 7,091 Value Stream Cost per Unit Sold $ 1.30 1.11 1.04 0.91 0.90

Capacity at Bottleneck Cell 4 4 4 3 2Productive Capacity at Bottleneck % 111.22% 111.11% 97.22% 84.18% 84.18%

Non-Productive Capacity at Bottleneck % 7.52% 4.27% 3.48% 9.95% 2.52%Available Capacity at Bottleneck % -18.75% -15.38% -0.71% 5.87% 13.31%

Financial PerformanceIncome $ 110,000 109,800 124,800 154,800 156,000

Material Cost $ 49,400 37,860 44,170 48,823 47,827 Energy Costs $ 1,541 1,541 1,541 1,233 1,113

Wages, Salaries and Benefits $ 25,937 25,937 25,937 30,937 30,937 Other Costs $ 998 998 998 998 998

Total Value Stream Cost $ 77,876 66,336 72,646 81,992 80,875 Value Stream Profit $ 32,124 43,464 52,154 72,808 75,125

Value Stream Profit % 29.20% 39.58% 41.79% 47.03% 48.16%

Week 32: Option 2


SUMMARY BOX SCORES


Week 32: Option 2

Performance DataQuantity Processed and Sold 60,061 60,000 70,000 90,000 90,000 90,000

Value Stream First Time Through % 60% 78% 78% 90% 94% 94%Value Stream On Time Delivery % 50% 75% 75% 88% 93% 91%

Sales per Employee $ 6,111 6,100 6,933 7,036 7,740 7,091 Value Stream Cost per Unit Sold $ 1.30 1.11 1.04 0.91 0.86 0.90

Capacity at Bottleneck Cell 4 4 4 3 1A 2Productive Capacity at Bottleneck % 111.22% 111.11% 97.22% 84.18% 96.45% 84.18%

Non-Productive Capacity at Bottleneck % 7.52% 4.27% 3.48% 9.95% 3.53% 2.52%Available Capacity at Bottleneck % -18.75% -15.38% -0.71% 5.87% 0.02% 13.31%

Financial PerformanceIncome $ 110,000 109,800 124,800 154,800 154,800 156,000

Material Cost $ 49,400 37,860 44,170 48,823 46,870 47,827 Energy Costs $ 1,541 1,541 1,541 1,233 1,062 1,113

Wages, Salaries and Benefits $ 25,937 25,937 25,937 30,937 28,125 30,937 Other Costs $ 998 998 998 998 998 998

Total Value Stream Cost $ 77,876 66,336 72,646 81,992 77,055 80,875 Value Stream Profit $ 32,124 43,464 52,154 72,808 77,745 75,125

Value Stream Profit % 29.20% 39.58% 41.79% 47.03% 50.22% 48.16%


Week 32: Option 2

Universal Valve Company Capacity Exercises

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