Manufacturing Lead Time Production Rate Capacity Utilization Availability Work in Process

Manufacturing Lead Time
Production Rate
Capacity
Utilization
Availability
Work in Process
Manufacturing Lead Time
Total time required to manufacture an item, including
order preparation time, queue time, setup time, run
time, move time, inspection time, and put-away time.
For make-to-order products, it is the time taken from
release of an order to production and shipment. For
make-to-stock products, it is the time taken from the
release of an order to production and receipt into
finished goods inventory.
The customer wants to know how soon you can
complete his order and supply his raw material. The
customer usually doesnt care about holidays, late
suppliers, lost drawings, broken down machinery, or
work force shortages.
Inside many manufacturing companies the confusion
about MLT can lead to embarrassment.
The best way to avoid confusion, finger-pointing and
bad customer relations is to firmly fix the MLT in
everyones mind.
The customer, the sales department, the engineering
department, the purchasing department, the
production, and the accounting departments .
To monitor the MLT and the activities in this time
period, the Master Schedule is the most useful tool.
It can be used to set deadlines, and to highlight
potential bottlenecks before they cause problems.
The master schedule can be used as the benchmark to
measuring the performance to the schedule and the
stated MLT.
Production Rate

In manufacturing, the number of goods that can be
produced during a given period of time. Alternatively, the
amount of time it takes to produce one unit of a good.

In construction, the rate at which workers are expected to
complete a certain segment, such as a road or building. The
production rate will depend on the speed at which workers
are expected to operate, generally categorized as slow,
average or fast.

For manufacturing and construction, a higher
production rate can lead to a decrease in quality. As
machines or employees work to have more product
pushed through the production line or more of a
building completed, more mistakes are likely to
happen. There is thus a point at which a decrease in
quality could wind up costing a company more, even if
less time is needed to push out a unit.
Capacity
The ability to hold, receive or absorb.
The maximum amount or number that can be
contained or accommodated.

Examples
The club has a 1,000-person capacity.
A bottle with a capacity of two liters
Does he have the capacity to handle this job?

Utilization
The proportion of the available time (expressed
usually as a percentage) that a piece of equipment or a
system is operating.
Formula: Operating hours x 100 available hours.
Utilization is the primary method by which asset
performance is measured and business success
determined.
In basic terms it is a measure of the actual revenue
earned by assets against the potential revenue they
could have earned.
[

Availability
Characteristic of a resource that is committable,
operable, or usable upon demand to perform its
designated or required function. It is the aggregate of
the resource's accessibility, reliability, maintainability,
serviceability, and securability.
The percentage of time that a machine is actually able
to produce parts out of the total time that it should be
able to produce. parts This number includes
breakdowns, setups, and adjustments.
Work in Process
Work in process (also known as work in progress or
WIP) refers to the investment in goods that are
currently in production which have not yet been
completed for sale.
Work in progress refers to the materials and partially
completed products which are in various stages of the
production process. WIP does not include raw
materials or finished products at the beginning and
end of the production cycle, respectively.

WIP accounting
Work in process accounting is when a company tracks the
amount of WIP in their stock at the end of an accounting
period and assigns a cost to it for stock valuation purposes.
This assigned cost is usually based on the percentage of
WIP that are completed at the end of the period.
WIP is often more valuable than raw materials, but lower
valued than finished products.
In an effort to reduce the amount of capital tied up in the
manufacturing process, most companies strive to keep
their WIP amount as low as possible.

WIP - Not always necessary
On the other hand, some production periods are very
brief period and therefore this process does not need
to be accounted for; instead, the items in production
are simply considered as raw materials (i.e. in a bakery,
ingredients in the dough are still considered raw
materials, not WIP investment).
In this case, inventory essentially shifts directly from
the raw materials inventory to the finished goods
inventory, with no separate work in process accounting
at all.

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