OUTLINE OF TOPICS THORUGHPUT ANALYSIS

> Throughput Analysis

> Learning Curve Notes:
> Strategic Profitability ThroughpuEfficiency x Quality Time
> Strategy Map

Actual
Velocity= (Theoretic Velocity) x ( QualityYield) x (MCE)
Actual Theoretical Actual units/
units/ units/Theoreticalti theoretical
Actual me units
Actual Units= Throughput/ Actual time
Velocity where: theoretical where:
time is ideal VA theoretical units
where: is units
actual processed
time is
Summary of problem: VA +
NVA
> Total units attemepted 6M
> Good units manufactured 4.8M
> Processing Time (total hrs) 800
> Value-added processing time 600

Requirements:
> No. of defective units were produced
> Manufacturing time velocity
> Process Quality yield
> Hourly throuput
 LEARNING CURVE

Formula Illustration:

y= a[x^b] Given Compute for the following:

unit 1 100 hours time to complete 3rd, 5th, 6th and 7th units
Where: Unit 2 80 hours average time using CAT
y time spent for partivular unit Unit 4 64 hours average time using IUT
a time spent for first unit Unit 8 51.20
x order (pang-ilan yung cinocompute)
b ln(learning curve) Unit Time Average time using CAT Average time using CAT IUT
Ln2
Unit (a*b)-
1 100.00 (a) Time (b) a*b a*b Time before time
2 80.00 1 100.00 100.00 100.00 0.00 100.00
3 70.21 2 80.00 160.00 160.00 100.00 60.00
4 64.00 3 70.21 210.63 210.63 160.00 50.63
5 59.56 4 64.00 256.00 256.00 210.63 45.37
6 56.17 5 59.56 297.82 297.82 256.00 41.82
7 53.45 6 56.17 337.01 337.01 297.82 39.19
8 51.80 7 53.45 374.14 374.14 337.01 37.13
8 51.80 414.40 414.40 374.14 40.26
Illustration: Nautilus Company Solution

a) Predicted total costs of producing 6 PT190

(Nautilus will keep the first development boat assembled costed at 1,575,000)

1st Compute for average time/unit using CAT as stated in the problem
Unit (a) Time (b) a*b
1 15,000.00 15,000.00 Total Costs computation
2 13,500.00 27,000.00 Direct Material (6 x 200,000) 1,200,000.00
3 12,693.08 38,079.23 Direct Labor (63,114.52 x 40) 2,524,580.90
4 12,150.00 48,600.00 Variable OH ( 63,114.52 x 25) 1,577,863.06
5 11,744.80 58,724.00 Other MOH (20% of DL) 504,916.18
6 11,423.78 68,542.68 Total costs 5,807,360.15
7 11,159.22 78,114.52

2nd compute for average time/unit using IUT

a*b Time before (a*b)-time b) Dollar-amount difference

15,000.00 0.00 15,000.00 Direct material ( 6 x 200,000) 1,200,000.00
27,000.00 15,000.00 12,000.00 Direct Labor (6 x 15,000x 40) 3,600,000.00
38,079.23 27,000.00 11,079.23 Variable OH ( 6 x 15,000 x 25) 2,250,000.00
48,600.00 38,079.23 10,520.77 total incremental hours Other MOH (20% of DL) 720,000.00
58,724.00 48,600.00 10,124.00 Total costs (linear) 7,770,000.00
68,542.68 58,724.00 9,818.68 Less: Total costs in a (5,807,360.15)
78,114.52 68,542.68 9,571.84 Dollar difference 1,962,639.85
Total incremental hrs 63,114.52
STRATEGIC PROFITABILITY
Solution:

For No. of defective units: For Process Quality yield

Total units attempted (total units manufactured) 6,000,000.00 given Good units manufactured (good units) 4,800,000.00

Less: Good units manufactured (4,800,000.00) given Divided by: total units attempted 6,000,000.00
Number of defective units 1,200,000.00 Process Quality Yield 80%

For Manufacturing velocity For Hourly Throuput

manufacturing velocity is MCE Hourly throuput is actual velocity

Value-added processing time 600.00 Actual Units (good units) 4,800,000.00

Divided by: Processing time (total hours) 800.00 Divided by: Actual time 800.00
Manufacturing velocity 75% Hourly throughput 6,000.00

For Process Productivity

Process productivity is efficiency (theoretical velocity)

Total units attempted (theoretical units) 6,000,000.00

Divided by: value-added processing time ( ideal VA time) 600.00
Process Productivity 10,000.00
Illustration: Nautilus Company
Illustration: Nautilus Company Solution

c) compute average time using IUT

time/unit
of CAT
15,000.00 Direct Materials (6 x 200,000) 1,200,000.00
13,500.00 Direct Labor (40 x 72,670.88) 2,906,835.05
12,693.08 Variable OH (72,670.88 *40) 1,816,771.91
12,150.00 Other MOH (20% of DL) 581,367.01
11,744.80 Total Costs 6,504,973.97
11,423.78
11,159.22
72,670.88
Illustration: Westwood Company Solution

a) Partial productivity profile for 2016 and 2017

Year 2016 Year 2017

Direct Materials 0.33 0.34
Conversion Costs 0.80 0.84
Selling and Customer 1,333.33 1,448.28