Sound Tek Inc. manufactures electronc stereo equipment. The manufacturing process includes...


Sound Tek Inc. manufactures electronc stereo equipment. The manufacturing process includes printed circult (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards, each board requires 4 minutes of board assembly time. After each batch is completed, the operetor moves the assembled boards to the final assembly area. This move takes 11 minutes to complete.

The final assembly for each stereo unit requires 22 minutes and is elso done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the flnal test, the 50-unit batch Is tested one at a time. Each test requires 6 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations, Packaging and labeling requires 8 minutes per unit.

1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 50 units. Categorize the non-value-added time Into walt and move time. Round the percentage to one decimal place.

Value-added lead time _ _ _ min.

Non-value-added lead time:

Wait time lead time _ _ _min.

Move time lead time _ _ _min.

Total non-value-added lead time _ _ _ min.

Total lead time _ _ _ min.

Value-added ratio (as a percent) _ _ _%

2. Move time in this process could best be reduced by:

a. Doing nothing

b. Changing the layout from a process orientation to a product orientation

c. Increasing batch sizes.

d. Eliminating the testing step

e. Hiring more workers.

Capital Budgeting:

As a management decision technique, capital budgeting allows the management to work within their planned objectives in achieving thier goals. It serves as a road map of the company.

Answer and Explanation: 1

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Value-added minutes 40 min
Non-value-added minutes:
Wait time minutes 1790 min
Move time minutes 31 min
Total non-value-added time 1821 min

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Learn more about this topic:

What Is Capital Budgeting? - Techniques, Analysis & Examples


Chapter 3 / Lesson 13

Learn about capital budgeting decisions with examples. See different types of capital budgeting techniques, such as payback period and internal rate of return.

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